A survey of members of the National Association of Federal Credit Unions finds that while most say credit union lending has improved, new regulations and proposals including the QM rule and the National Credit Union Administration’s risk- based capital proposal threaten to increase costs and stall the lending activity growth.
NAFCU members also said they have seen a return to pre-recession growth rates of total outstanding loans on a year-over-year basis.
“The Dodd-Frank Act requires the CFPB to expand the HMDA reporting requirements to include additional data, including total points and fees, the length of introductory/teaser rates, property value, and applicant credit score,” the NAFCU monthly report states. “When the CFPB implements these Dodd- Frank required changes, it will increase the regulatory burden on credit unions.”
Respondents in the May Economic & CU Monitor survey said they expect an average initial cost of $9,591 to update systems and an ongoing average annual cost of $3,842.
The report says that the CFPB is also considering additional reporting requirements beyond those mandated by Dodd-Frank, such as mandatory reporting of denial reasons, debt- to-income ratio, QM status, combined loan-to-value ratio, total origination changes, and total discount points.
Survey respondents expect an average initial cost of $13,955 to update systems and an ongoing average annual cost of $4,842 in order to comply with the new requirements.
“Almost one quarter (24%) of respondents anticipate having to increase fees for consumers in order to offset new costs associated with the additional HMDA reporting requirements,” the report says.
Other findings in the report are that survey respondents remained pessimistic about future first mortgage loan growth.
Nearly half (48%) indicated that they would cease to originate non-QM loans, while 38% plan to reduce their non-QM loans and 14% expect to offer about the same amount.
Roughly 13% of those in the survey said their 2013 mortgage originations would not have met the new QM criteria.