Credit union trades rejoice as CFPB makes major changes

Five big questions about the Mulvaney-led CFPB

It was a busy Thursday for the Consumer Financial Protection Bureau, as it made the holiday season a happy one for credit unions by announcing a delay in implementing the prepaid accounts rule and said it will not assess penalties for Home Mortgage Disclosure Act data collected in 2018.

The first announcement from the CFPB was a statement saying it would open a rulemaking to reconsider various aspects of the Bureau’s 2015 HMDA rule and will not assess penalties for errors in data collected in 2018. The latter point is particularly significant, as mortgage lenders have spent months scrambling to be ready to collect and report a number of new data points starting Jan. 1, 2018.

“The bureau does not intend to assess penalties with respect to errors in data collected in 2018 and reported in 2019,” the CFPB said in a press release. “Collection and submission of the 2018 HMDA data will provide financial institutions an opportunity to identify any gaps in their implementation of amended Regulation C and make improvements in their HMDA compliance management systems for future years. Any examinations of 2018 HMDA data will be diagnostic to help institutions identify compliance weaknesses and will credit good faith compliance efforts.”

Mick Mulvaney, acting CFPB director.

Bloomberg News

Just minutes later, the CFPB issued a statement on the prepaid account rule:

“The Bureau expects to issue a final rule amending certain aspects of its 2016 rule governing prepaid accounts soon after the new year. As part of that process, the Bureau expects, based on its review of the comments received, to further extend the effective date of the 2016 rule to allow additional time for implementation of the final rule. The Bureau proposed making changes to the prepaid rule in June; the comment period on the proposal ended in August, and the record is now closed for public input.”

As currently written, the prepaid rule requires companies to disclose fees on prepaid cards and cooperate with consumers who discover unauthorized charges or errors. Credit union trade groups have raised concerns about the unintended impact the rule may have on the ability of issuers to continue providing prepaid account access.

CU trades rejoice

Both the Credit Union National Association and the National Association of Federally-Insured Credit Unions quickly responded with statements Thursday regarding both announcements from the bureau.

The Credit Union National Association said it, in concert with state CU leagues, has “strongly advocated” for relief from HMDA reporting requirements in dozens of meetings and letters. In letters to both former CFPB Director Richard Cordray and Interim CFPB Director Mick Mulvaney, CUNA said it outlined why changes to HMDA needed to be made to allow credit unions to continue to serve consumers.

“This is a significant win for credit unions, as CUNA has urged the bureau for years for relief from HMDA requirements that place a heavy burden on credit unions,” Jim Nussle, CUNA’s president and CEO, said in a statement. “Credit unions will be unduly burdened by the data reporting requirements finalized in October 2015, and CUNA will fully engage with the bureau during this rulemaking process to ease these reporting requirements on credit unions.”

Brandy Bruyere, vice president of regulatory compliance at the National Association of Federally-Insured Credit Unions, said, “NAFCU supports the CFPB’s decision not to require credit unions to resubmit HMDA data where submission errors are not material, with NCUA taking a similar approach. We also appreciate that the bureau will reconsider the scope of HMDA in a future rulemaking. The 2015 HMDA rule requires collecting a significantly greater number of data points than what was mandated by Dodd-Frank, and relief for smaller institutions was only temporary. NAFCU is glad to see the CFPB, under acting Director Mulvaney’s leadership, is willing to hear credit unions’ concerns. In the new year, we will continue to advocate for more credit union exemptions from this burdensome rule.”

As for the prepaid accounts rule, Andrew Morris, regulatory affairs counsel for NAFCU, said while the trade group “continues to believe the prepaid rule should not apply” to credit union issuers of prepaid accounts, “We welcome the prospect of having additional time to implement it. We also look forward to the Bureau finalizing its recently proposed amendments, which are aimed at alleviating regulatory burden.”

Ryan Donovan, CUNA’s chief advocacy officer, said, “We are pleased to see the CFPB announce the implementation delay of the rule, which we have stated will provide issuers and vendors adequate time to make the required changes. While we have concerns over the rule’s application to certain prepaid accounts, we appreciate the bureau’s willingness to issue a clarifying rulemaking, and CUNA will engage with the bureau further on ways the rule can avoid placing additional burdens on credit unions.”

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