HOEPA: Section 226.32 (Prepayment penalties)
Posted by Anthony Demangone
On to section 226.32. The HOEPA amendments added a new protection for "section 32" mortgages. But this new protection shouldn't be that big of a deal. It says that unless you fit within the exception outlined in 226.32(d)(7), you won't be able to charge a prepayment penalty on a mortgage subject to 226.32 (as determined by fees or the loan's interest rate).Â
That's old news to us. FCUs, as an industry, can't charge prepayment penalties. The prohibition is outlined in the Federal Credit Union Act.
Worth noting: Some federal credit unions waive closing costs on their mortgages. But if the member pays off that mortgage within 2 years, they seek to recoup those fees. Is that a prepayment penalty? NCUA says no.
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Here are a few other things to chew on:
- NCUA recently issued Letter to Credit Unions 09-CU-17. The letter gives everyone a "heads up" that on September 1, 2009, NCUA is moving toward web-based system to collect Report of Officials and 5300 Call Report information.  NCUA conducted a webinar to explain the changes, which you can access from the guidance noted above. They plan to offer 3 more webinars on the subject in the next few months
- On September 18, 2009, the NACHA IAT era will begin. The Fed is offering IAT transaction testing until September 11, 2009 for its FedACH customers. If you are one of those customers, you may want to take advantage.
- Each year, the Fed's annual report documents how banks and thrifts are complying with consumer regs. It lists the most common compliance boo-boos in many areas. Shari Pogach has written an article highlighting the report, and the article can serve as a simple auditing tool to judge whether you have made similar mistakes in your shop. NAFCU members can access the article here.