WASHINGTON—NAFCU is expressing support for the Consumer Financial Protection Bureau’s notice of proposed rulemaking (NPRM) amending the Truth in Lending Act’s (TILA) escrow requirements for higher priced mortgage loans (HPMLs).
The revision comes in accordance with the Economic Growth, Regulatory Relief, and Consumer Protection Act (S.2155), which was enacted in 2018 and provides broad regulatory relief.
In the association’s letter, Senior Regulatory Affairs Counsel Kaley Schafer said NAFCU appreciates the Bureau’s recent interpretive rule establishing that the Home Mortgage Disclosure Act (HMDA) data will be used to determine an “underserved area” as outlined in Regulation Z.
“The interpretive rule improves clarity and will assist credit unions in determining overall eligibility for this escrow exemption,” wrote Schafer. “Currently, credit unions serve many rural and underserved markets and a broader escrow exemption would allow credit unions to serve more members in these markets.”
Mitigating ‘Chilling Effects’
While credit unions do not typically originate HPMLs, Schafer noted, the additional exemption category may mitigate any chilling effects or disincentive to serving the occasional member with a HPML when appropriate to meet the needs of the member.
In addition, Schafer stated the proposed three-month grace period will allow for some credit unions to still qualify for the exemption if they originate over 1,000 loans in a calendar year, but otherwise remain exempt.
“NAFCU encourages the Bureau to support future legislative initiatives that increase the maximum thresholds for escrow exemptions so that more credit unions may utilize this exemption,” concluded Schafer.