Compliance Blog

Written by Jillian Pevo, NAFCU’s Director of Legislative Affairs

For over two weeks it felt like Groundhog Day here in Washington –each day it seemed like additional federal employees were furloughed, Congress did a whole bunch of arguing, and not a lot got done. Congressional staffers deemed “non-essential” were instructed to stay home, and the agendas of various committee chairmen temporarily fell by the wayside as negotiating relative to the government shutdown and national debt ceiling took center stage. 

It’s worth noting that credit unions really showed their true colors during this difficult time – numerous lawmakers took note of the special incentives and programs many of your credit unions offered to your members affected by the shutdown. We aren’t surprised, but our staff here at NAFCU can’t thank you enough for all you do. 

When the logjam in Congress finally broke last week, with an agreement on government funding until January 15 and on the debt ceiling through February 7, elected officials scrambled to fill the Congressional agenda with previously postponed hearings and a host of other activity related to the issues they care about most.  

One issue that seems to be percolating in both the House Financial Services and Senate Banking Committee’s is the CFPB’s qualified mortgage (QM) definition in satisfying “ability to repay” requirements under the Dodd-Frank Act. As currently defined, QMs cannot have points and fees in excess of 3 percent of the loan amount (for loans $100,000 or greater). This will make meeting the QM test problematic for lenders and non-QM loans would be less likely to be made or would only be available at higher rates due to heightened liability risks.

Representative Bill Huizenga (R-MI) has been out front on this issue and recently, in the spirit of compromise, introduced a scaled down version of a more board piece of legislation to modify the definition of “points and fees.”  The Mortgage Choice Act (H.R. 3211) would exclude title charges from the “points and fees” definition, and clarify that escrow charges should also be excluded. Representative Huizenga’s bill is bipartisan, and there is also a bipartisan Senate bill (S.949) that would also address this issue. 

With the ability-to-repay provisions set to take effect in January of 2014, time is of the essence for stakeholders to make their case to Congress. NAFCU’s government affairs team is committed to pursuing this issue in hopes of seeing changes before the effective date. As Congress came back into session yesterday, NAFCU brought H.R. 3211 to the attention of House Speaker Boehner and Minority Leader Nancy Pelosi. We are also working with other industry groups to help educate members of Congress about how burdensome the points and fees definition will be for lenders, and ultimately consumers. We recognize the importance of this issue to credit unions.  However, it should be noted, as the recent government funding fight so keenly demonstrated, getting almost anything passed in the current environment is an uphill battle.  Nonetheless, NAFCU will be here fighting for you.

As always, if you have questions about what’s happening in Congress, or additional insight that may be helpful to NAFCU’s lobbying team, please reach out to us.