LAS VEGAS-Unlike some credit unions that are still deciphering the new CFPB mortgage rules that take effect in January, $622-million Silver State Schools CU says it already is prepared.
VP and Chief Lending Officer Steve Van Sickler told Credit Union Journal Silver State has a leg up because it deals with an even more restrictive set of rules in this state. Before a lender can file for foreclosure, the State of Nevada requires mediation between the lender and the borrower, with consumers provided assistance from third-party attorneys to ensure they have the opportunity to save their homes, he explained.
"We may be a little different from some institutions due to the mediation rules in place in Nevada," he said. "The CFPB says we have to wait 120 days to foreclose, which will not have a big impact on our portfolio because our delinquent loans are fully reserved for. The big impact will be newly delinquent loans. We had been allowed to foreclose in as early as 30 days, but did not do so."
Once a Nevada lender files for foreclosure, a meeting with the mediator is scheduled to see if the two parties can work out a modification rather than a foreclosure, Van Sickler continued.
"It has not been clarified if the Nevada rule supersedes the CFPB rule," he said. "Our programs comply with HAMP [Home Affordable Modification Program] guidelines to determine if borrower is suffering from financial hardship."
SSS FCU services its retained portfolio in house and sub-services its Fannie Mae loans. Van Sickler said the credit union provides oversight to any third parties it works with to make sure they understand the rules, "and they do."
Waiting Period
The biggest change with the new CFPB rules is the 120-day waiting period before foreclosure can commence. Van Sickler said in the past if the borrower did not qualify for financial assistance and did not accept the modification package he/she was offered, the CU would foreclose immediately.
"We have financial assistance programs and make members aware of those as soon as the loan is 10 days past due," he said. "But we have to wait 120 days to file notice of default per the CFPB, then the State of Nevada requires a mediation hearing. Once the mediator issues a certificate of mediation, we can move toward foreclosure. Mediation can take 30 to another 120 days."
A Jan. 17 CFPB release refers to procedures for borrowers who have missed two consecutive payments. Van Sickler said that raises a question about accepting a single payment from a borrower who already is two payments behind. He said this "could be an issue," and the bureau needs to provide further clarification.
With that said, Van Sickler predicted the new rules will not have an impact on SSS FCU making new loans going forward thanks to renewed health in the Las Vegas housing market. "We are seeing good values and we are making good loans to good borrowers and do not expect them to go into foreclosure."
