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NAFCU's Schafer details the latest on CFPB rulemaking efforts
NAFCU Regulatory Affairs Counsel Kaley Schafer is giving member credit unions an inside-look at the association's latest advocacy work with the CFPB in a new post in the NAFCU Compliance, Risk & BSA and Lending Networks. In the post, Schafer provides an update on a number of key issues, including small business lending data collection and the ability-to-repay (ATR)/qualified mortgage (QM) rule.
Section 1071 of the Dodd-Frank Act
NAFCU has long urged the bureau to exempt credit unions from rulemakings related to data collection and reporting on small business lending – required under Section 1071 of the Dodd-Frank Act – as the industry is subject to strict limits on member business lending and field of membership rules. Due to these restrictions, reported data may not achieve the statutory purpose.
Earlier this year, NAFCU reiterated its call for the bureau to exempt credit unions as the CFPB works to assess compliance costs that would be incurred under Section 1071.
NAFCU has also shared how implementation of the rule could influence the pricing or accessibility of small business loan products.
Additionally, the CFPB earlier this year filed its first status report with the California federal district court in a lawsuit filed against the Bureau alleging wrongful delay in adopting regulations to implementing Section 1071.
During a CFPB symposium last year, stakeholders discussed various issues when implementing the rule, including key definitions and data points to collect. Panelists recommended that data be easy to upload and meet the rule's statutory objectives, ensure harmony with other rules, and definitions should be clear and easy to understand. Following the symposium, the bureau outlined its rulemaking plan for Section 1071.
ATR/QM rule
As the bureau considers a revised definition of a general QM in light of the expiration of the temporary government-sponsored enterprises (GSE) QM loan (GSE patch), NAFCU has continuously highlighted credit unions' concerns about having to hold non-QM loans on their balance sheets and warned against using an average prime offer rate approach.
NAFCU Monday reiterated its call for the CFPB to allow for an 18 to 24 month extension of the GSE patch, at a minimum.
The association has also previously met with representatives at the CFPB to discuss the QM patch and highlighted the benefits of the GSE patch in providing credit unions with the ability to sell their loans into the secondary market – generating "vital" liquidity enabling credit unions to make more loans to their members, especially those of low- or moderate-income.
Additionally, Schafer offered several recommendations to inform the efforts of the CFPB's taskforce on consumer financial law as it looks for ways to improve and strengthen laws and regulations.
For more on NAFCU's recent advocacy efforts, view Schafer's post. NAFCU continues to work closely with the CFPB to identify areas of relief for credit unions and will continue to advocate that the agency do more to ensure institutions can meet the urgent needs of members and provide support.
NAFCU has several resources available online to assist credit unions, including a summary table of regulator actions, detailing actions taken by agencies to provide guidance and relief to financial institutions.