Most credit unions continue to struggle with implementing the new CFPB rules, even though the effective dates have long passed. With all of the information and content, credit unions are having a difficult time interpreting the rules and their exemptions to certain aspects of those rules. Here is a breakdown of the exemptions provided for in the CFPB rules.
Small Creditor Exemption – Ability to Repay / Qualified Mortgage Rule
Under the Ability to Repay (ATR)/Qualified Mortgage (QM) rule, credit unions that had assets below $2 billion and the credit union and their affiliates together originated no more than 500 first lien closed-end residential mortgages subject to the ATR requirements in the preceding calendar year are considered a “small creditor.” As a small creditor under this rule, there are two additional categories of QMs the credit union can make and have a safe harbor under the rule (Small Creditor QM and Balloon Payment QM).
Small Creditor Exemption – High Priced Mortgage Loan Escrow Rules
The CFPB’s escrow rules, which require credit unions to establish and maintain escrow accounts for first-lien higher-priced mortgage loans (HPMLs) for at least five years provides for an exception for small creditors. This definition provides for additional criteria to be met in order to qualify. Under this rule a small creditor has the same requirements to have less than $2 billion in assets and together with affiliates, the credit union cannot originate more than 500 first lien covered transactions in the preceding calendar year. However, to qualify for this exemption the credit union must also make more than half of their loans to members in rural and underserved counties and cannot maintain escrow accounts on any loans serviced.
Small Servicer Exemption
In order to qualify for the small servicer exemption under the CFPB Mortgage Servicing Rules, the credit union, together with its affiliates, must service 5,000 or fewer mortgage loans and the credit union (or affiliate) has to be the creditor or assignee for all of them.
International Remittance Transfers
Although not an exemption, the CFPB made a determination in its final rules that in order to be considered as providing international remittance transfers in the “normal course of business,” credit unions will need to provide more than 100 international remittance transfers in the previous calendar year. Credit unions providing fewer than 100 will be provided with a safe harbor and do not have to comply with the requirements under the new rules.
Credit unions are encouraged to visit the CFPB Mortgage Compliance Center for more detailed information on the requirements of each rule and how it pertains to their credit union. Additionally, credit unions are encouraged to use the compliance helpline at firstname.lastname@example.org or (800) 262-6285, ext. 193.