WASHINGTON–The GAO has released a report that suggests while compliance costs have increased, credit unions and community banks have continued to remain active in servicing mortgage loans under the CFPB’s new mortgage servicing rules. The report recommended that CFPB create a more complete plan for reviewing its rules.
In response to the GAO report, NAFCU’s general counsel, Carrie Hunt, said, “The GAO report confirms our concerns that CFPB's mortgage servicing rules are impacting credit unions. Furthermore, the findings underscore the fact that increasing compliance costs have impacted customers’ costs and choices. The report notes that several institutions no longer offered customers certain products because offering them would necessitate additional regulatory requirements. For this reason, we continue to urge CFPB to provide greater guidance and clarifications on these rules to insure that credit unions can continue to serve their members' mortgage needs."
The GAO said its analysis found the share of mortgages serviced by community lenders, including credit unions, remains small compared to other lenders, but has doubled between 2008 and 2015. Lenders told the GAO the new rules had increased costs for their institutions, such as the need to hire new staff and update systems.
Despite all those new rules, however, the GAO said it found the bureau’s rules remain incomplete. “CFPB has not yet finalized a retrospective review plan or identified specific metrics, baselines, and analytical methods, as encouraged in Office of Management and Budget guidance,” the report found.
In its response to the GAO report, NAFCU noted again that it was the only financial services trade association to oppose subjecting credit unions to CFPB authority under Dodd-Frank, and that it continues to maintain the CFPB should exercise its authority to exempt credit unions from regulations aimed at bad actors.
CUNA's Chief Advocacy Officer Ryan Donovan said the trade association appreciates "that the GAO used CUNA as a source and acknowledges that credit unions are incurring increased compliance costs and other regulatory burdens, yet choose to remain in the mortgage servicing business because of their consumer focused business model. In other words, the needs of their members come first. What the report does not examine is whether the consumer benefits in any measurable way from the increased regulations, or how much better the market could be without the regulations. We are grateful for the GAO’s recommendation to the CFPB to accelerate their plan to measure the effects of the new regulations in a comprehensive and thoughtful manner. We believe this will go a long way to help the agency understand the impact of its rules on credit unions."