3 Senate bills that could strengthen credit union mortgage lending

House versions of bipartisan regulatory relief bills already passed

Credit unions are enduring a crisis of creeping complexity with respect to regulatory burden, and the Credit Union National Association believes at least three bipartisan bills currently before the U.S. Senate could alleviate some of that drag.

The ever-increasing, never-decreasing regulatory burden erects barriers to their ability to serve their members, particularly in the mortgage space, CUNA says. 

“The enactment of these bills would represent a small step in the right direction toward removing barriers to credit union service,” said Jim Nussle, president of CUNA. “As the Senate reassembles for the remaining weeks of the 113th Congress, we urge passage of these important bills.”

The 113th Congress could, despite its lame duck status, pass these bills before the Christmas recess and the swearing in of the 114th Congress in 2015.

The bills CUNA are urging action on include:

S. 1806, the Capital Access for Small Community Financial Institutions Act

Introduced by Senators Sherrod Brown, D-Ohio, and Rob Portman, R-Ohio, would make privately insured credit unions eligible to join the Federal Home Loan Bank System, correcting a drafting error from the 1989 legislation that opened the Federal Home Loan Bank system to commercial banks and federally insured credit unions. 

This legislation would strengthen the safety and soundness of the 130 privately insured credit unions in the country by opening access to additional liquidity. 

The legislation would not enhance risk to the Federal Home Loan Bank System, as the size of these credit unions is relatively small and the company that insures them is regulated by the same state regulators that oversee many of the members of the Federal Home Loan Bank system. 

A companion bill in the House of Representatives passed by a vote of 395-0 in May.

S. 635, the Privacy Notice Modernization Act

The Privacy Notice Modernization Act, introduced by Senators Brown and Jerry Moran, R-Kan., would reduce credit union regulatory burden and enhance consumer protection by amending the Gramm-Leach-Bliley Act to require credit unions to send privacy notices to existing members only when the credit union changes its privacy policy.

The privacy policy would also be available to members on demand and on the credit unions’ website. The annual privacy notice requirement is unnecessary, costly and confusing to consumers. 

A companion bill in the House of Representatives passed on suspension during the first session of this Congress.

S. 1577, the Mortgage Choice Act

The Mortgage Choice Act, introduced by Senators Joe Manchin, D-W.V., and Mike Johanns, R-Neb., would exclude the points and fees associated with affiliated companies for purposes of determining whether or not a mortgage meets the Consumer Financial Protection Bureau's qualified mortgage definition under its ability-to-repay rule. 

Defining points and fees in this way will maintain a competitive marketplace, prevent over-pricing or limiting choice in low-moderate income areas and allow consumers to enjoy the existing benefit of working through one mortgage provider.

A companion bill passed the House of Representatives earlier in this Congress. 

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