The Point: Dec. 23, 2013
Holiday schedule: The Credit Union Association of New York, NYCUF, Covera, CUC Mortgage Corporation and UsNet will close at 1 p.m. on Christmas Eve and will be closed Christmas Day. The Point will not be published Christmas Eve or Christmas Day. Happy holidays!
Reminder: New mortgage rules set to take effect next month
Over the next few weeks, a number of new final mortgage rules issued by the CFPB will take effect. To help ensure compliance, credit unionists are encouraged to review the effective dates and descriptions of each rule below.
Ability-to-Repay/Qualified Mortgage rule, effective Jan. 10: This rule requires lenders to make a good faith determination that a member has the ability to repay the debt he/she is requesting.
Home Ownership Equity Protection Act (HOEPA), effective Jan. 10: Currently, to be considered a HOEPA loan, the credit union rate must be greater than 8 percent above the average prime offer rate (APOR) on first-lien loans or greater than 10 percent above the APOR on subordinate lien loans. This rule amends those percentages to 6.5 percent for first-lien loans and 8.5 percent for subordinate lien loans, though the requirements under the rule remain the same.
Mortgage servicing rules under both Regulation Z and the Real Estate Settlement Procedures Act (RESPA), effective Jan. 10: These rules provide nine substantial changes to servicing mortgages, and most credit unions are exempt from a number of the changes. To qualify for an exemption, a credit union must service 5,000 or fewer mortgage loans and only service mortgage loans that they or their affiliate originate or own.
Loan Originator Compensation rule, effective Jan. 10: This rule extends codified prohibitions on compensating originators based on any of the transaction’s terms or conditions. The rule also: prohibits dual compensation; requires loan originator employees to be either registered as required under the Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act or screened in a similar fashion; prohibits the inclusion of mandatory arbitration clauses; and prohibits the financing of premiums or fees for credit insurance where the loan is secured by a dwelling.
Equal Credit Opportunity Act (ECOA) rule on providing appraisals and valuations, effective Jan. 18: This rule requires credit unions to provide a copy of appraisal reports and other written valuations prepared in connection with first-lien loans secured by a dwelling. The rule also requires credit unions to provide applicants with disclosures at the beginning of the application process.
Higher Priced Mortgage Loan Appraisals rule, effective Jan. 18: This rule requires credit unions to obtain a certified appraisal on higher priced loans.
Due to the numerous and substantial changes, NCUA has stated that federal regulators will first be looking for “good-faith compliance efforts” rather than immediate “compliance perfection.”
For more information on recent final rules, visit the Association website.
Youth membership strategies topic of CUNA white paper
Generation Y, comprised of 1.8 billion people, is the world’s largest generation and represents significant buying power, technological leadership and innovation. The CUNA Operations Sales and Service Council recently released a white paper offering credit unions ideas for gaining this key group’s trust and loyalty.
The paper, titled "Retail Strategies to Attract Youth," includes a list of products and technologies credit unions should be providing to meet Gen Y's demanding expectations, including:
- Easy account opening: Millennials are twice as likely to apply for an account online. The account opening process represents a new member’s first impression of the credit union, so an easy and quick process is essential.
- Powerful online tools: Millennials want the ability to do all their banking online. For many, these capabilities constitute “good member service,” because most will not experience face-to-face interaction with staff at a branch.
- Mobile banking: As more consumers access the Internet via smartphones, tablets and netbooks, credit unions must offer creative and effective ways to allow Gen Y to do their banking on mobile devices.
- New technologies: Global positioning, integration across delivery channels and more intuitive mobile capabilities are among the technologies that Gen Y expects.
- Easy loan solutions: Credit unions should be constantly looking for ways to make borrowing easier. With many millennials unemployed or underemployed and burdened with student debt—yet still anxious to be independent—borrowing money becomes a top concern.
To view the white paper, visit the CUNA Councils website (login required).
CUs encouraged to share Unite for Good stories by year-end
The Unite for Good initiative calls on credit unions to remove barriers, create awareness and foster service excellence in order to achieve a vision in which Americans choose credit unions as their best financial partner. As 2013 comes to an end, credit unionists are encouraged to share their Unite for Good efforts with CUNA by visiting the Unite for Good website.
The website was expanded earlier this year to include a virtual credit union community, enabling credit unionists to share stories, create profiles, ask questions and cultivate relationships with credit unionists across the country. Although all posts will be visible to the public under the “share stories” tab, profile information will only be accessible to other credit unions that have created a profile.