Qualified mortgage exemption still too narrow for credit unions

Posted: June 11, 2013 in Mortgage Information

About 27% of credit unions with less than $2 billion in assets that have a small mortgage operation would not qualify for exemption under the qualified mortgage rule, according to data from the National Association of Federal Credit Unions.

Under the QM rule, credit unions are exempt if they have assets of $2 billion or less and originate less than 500 mortgages.

However, Fred Becker, president and CEO of NAFCU disagrees with such requirements.

In a letter to Richard Cordray, director of the Consumer Financial Protection Bureau, Becker said, “I believe the 500 mortgages or less threshold to be incongruent in that the vast majority of credit unions of that asset size and significantly smaller, would typically originate more than 500 mortgages a year.”

For instance, of 879 credit unions with assets less than $2 billion that conduct at least 100 mortgages per year, 244 already extend over 500 or more.

Additionally, of the 244 credit unions, 198 exceeded the 500 threshold in the past 7 years and their total origination increased by an aggregate 155%.

Thus, NAFCU believes that appropriate small creditor mortgage threshold should be mortgages per year.

This already follows a concern of credit unions that the space will shrink due to small creditors reducing lending volume based on the rule changes.

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