WASHINGTON — CUNA and NAFCU are watching the House Financial Services Committee closely today, hoping the panel votes not only to provide regulatory relief for credit unions, but also approves a legislative amendment that could delay implementation of NCUA's risk-based capital rule.
The HFSC is scheduled to vote Tuesday on the Regulation D Study Act (H.R. 3240) and the Access to Affordable Mortgages Act of 2014 (H.R. 5148), as well as on a possible amendment to The Community Bank Mortgage Servicing Asset Capital Requirements Study Act (H.R. 4042) — which directs the federal banking agencies to conduct a study of appropriate capital mortgage requirements for mortgage servicing assets.
The amendment would require that NCUA study a provision of the RBC proposal that assigns a 250% risk weight for mortgage servicing rights.
CUNA testified before the House Financial Services subcommittee on financial institutions and consumer credit last week that the MSR weight would be both "punitive and unnecessary" and should be reduced to 100%. That would place it at a level similar to what is required of small banks in Basel III requirements.
The trade groups explained that if the amendment is adopted, it would delay the implementation of the NCUA's RBC final rule until an appropriate period of time after the agency's study is completed.
NAFCU Vice President of Legislative Affairs Brad Thaler, in a letter Monday to House Financial Services Committee Chairman Jeb Hensarling (R-Texas) and Ranking Member Maxine Waters (D-Calif.) urged the committee to approve the amendment to include NCUA.
"NAFCU has reviewed the bipartisan Community Bank Mortgage Servicing Asset Capital Requirements Study Act... that would delay the implementation of Basel III regulations on mortgage servicing assets until an impact study is conducted and alternatives are explored. Given the circumstances credit unions find themselves in with NCUA's risk-based capital proposal, NAFCU believes this is an appropriate vehicle to include a similar study requirement to be carried out by NCUA pertaining to its proposal."
Thaler wrote that enacting the amendment would be an "important step to help ensure that the agency, credit unions, Congress and others fully understand and comprehend all impacts of the risk-based capital proposal, especially as those that relate to mortgage servicing assets, before moving forward. Furthermore, the additional time provided by the study could help ensure that broader changes are done right in any final proposal."
The Regulation D Study Act would mandate the Government Accountability Office to study the impact of the Federal Reserve Board's monetary reserve requirements on depository institutions, consumers and monetary policy.
"As you are aware, Regulation D limits a credit union member's ability to transfer their money between savings and checking accounts to six transactions per month. Once a transaction is made beyond that limit, a member is either charged a fee or their savings account is re-classified as a transaction account,'" said Thaler. "Under current Regulation D rules, savings accounts are not subject to reserve requirements, while transaction accounts are. This discrepancy tends to be confusing for credit union members and often forces credit union employees to focus their attention on the compliance issue rather than customer service."
The Access to Affordable Mortgages Actwould exempt higher-risk mortgages of $250,000 or less from appraisal requirement provisions under the Truth in Lending Act if the lender holds the loan in portfolio for at least three years, and also provides important legal safeguards for lenders acting in good faith throughout the appraisal process.
