Go to:

May 2018
< Apr Jun >
Leaguer Email Subscription

You are not currently subscribed. Click Subscribe below to receive the Leaguer email.

Highway Bill Contains Major Victories for CUs
Wednesday, December 2, 2015 6:45 AM

A congressional conference committee's new draft highway and transit bill contains credit union regulatory victories strongly supported by Cornerstone and Credit Union National Association. The draft legislation creates a compromise bill expected to be voted on this week by both the U.S Senate and House.

Jim Nussle, president/CEO of CUNA, said, “This is a huge victory for credit unions and the over 100 million credit union members CUNA represents. The bill includes several key CUNA-backed provisions that will help remove barriers for credit unions to better serve their members. CUNA worked closely with lawmakers and staff on these provisions and we look forward to seeing the highway bill come to a vote in the House and Senate this week.”

For credit unions, the highway package includes provisions that would:

  • Modernize privacy notification requirements to allow credit unions and all financial institutions to send notices only when there is a policy change, not on an annual basis;
  • Allow privately insured credit unions to become members of the Federal Home Loan Bank (FHLB) system; and
  • Direct the Consumer Financial Protection Bureau to establish an application process allowing a person who lives in or does business in a state to apply to the CFPB to have designated an area in which the business is located as a rural area for purposes of a federal consumer financial law.

A designation of "rural" by the CFPB has many implications for credit unions, particularly with respect to the type of products they may offer their members in these areas.

For instance, under the Truth in Lending Act (TILA) an escrow requires certain lenders to create an escrow account for at least five years for higher-priced mortgage loans. If those loans are made by small lenders that operate predominately in rural or underserved counties, they are exempt from this requirement.

Another example includes the Ability-to-Repay and Qualified Mortgage standards under the TILA rule by which mortgage loans with balloon payments do not meet the QM standard. Like the escrow rule, small lenders that operate predominately in rural areas are eligible to originate balloon-payment QMs.

The conference bill also dropped a provision adamantly opposed by CUNA that would have allowed Congress to use Federal Housing Finance Agency guarantee fees (g-fees) for purposes beyond protecting against credit-related losses in the mortgage portfolios of Fannie Mae and Freddie Mac.

That contested provision would have increased g-fees and extended the fee's expiration date by four years to 2025. It would have allowed lawmakers to use the higher fees charged from 2021 to 2025 to fund highway programs.

CUNA joined a coalition of 30 financial organizations in a letter to Congress that successfully argued against that use of g-fees. CUNA warned it would shift a burden to homeowners and the housing sector in a manner that prevents the government-sponsored entities from effectively managing their risk and managing their duty to ensure that creditworthy borrowers from underserved communities have access to sustainable credit.