SAN ANTONIO-If CUs don't want to add insurance products to their growing list of compliance burdens they need to pay close attention to what Washington is discussing about regulating these products and speak with state and national legislators-and soon.
Mark Hein, CEO of SWBC's financial institutions group, told Credit Union Journal there are significant proposals being bandied about in Washington about insurance products many credit unions utilize on a regular basis. "These products are going to start to be regulated by the federal government if we don't get our arms around what is happening. The main thing credit unions need to do is communicate with their legislators on this matter because most of their communication in the last year with elected officials has been about interchange and the business lending cap. There are many other things going on."
Hein warned that the Consumer Financial Protection Bureau is starting to make a strong case for circumventing state's rights for lender-placed insurance products such as mortgage insurance. "Those things many of our credit union clients rely on every day to help mitigate their risk in their auto lending and mortgage lending portfolios now may be moving under the umbrella of the Consumer Financial Protection Bureau."
One proposal being discussed, Hein explained, is mandating that lenders take over paying the insurance premium on a person's home in the event the borrower stops paying their insurance premium, for any reason. Hein said there is help coming from insurance providers that are lobbying against the proposed actions. "It would make sense for the financial and insurance industries come together on this effort."
