The CFPB Starts Flexing Its Muscles
The CFPB is coming online and has begun proposing rules and examining financial institutions. While questions still abound on the bureau’s stance and operations, credit unions should consider the potential impact of new regulations. For example, most credit unions weathered overdraft protection regulations fairly well by getting members to opt-in. However, the CFPB is currently examining the policies and practices of the nine largest banks to see if additional regulation is necessary (Office of Information and Regulatory Affairs and Consumer Financial Protection Bureau). Depending on the findings, income from overdrafts could be under threat.
Mortgage statements are another example. The CFPB has stated that it would like to increase transparency in the mortgage servicing industry. To do this, it is proposing regulations for monthly mortgage statements that would include alerts for delinquent borrowings with information for housing counselors and options to avoid foreclosures. For adjustable rate mortgages, institutions would have to send warnings of interest rate adjustments and list alternatives consumers can pursue to avoid the adjustment (CFPB Seeks to Enhance Consumer Protections by Targeting the Mortgage Servicing Sector, National Mortgage Professional Magazine, April 2012). Such changes can increase expenses as a result of changing the statements as well as the possibility of additional paper and postage from warnings depending on how the regulation is worded.
While the CFPB has said it will consider credit unions’ unique needs, the cost of compliance could likely increase as a result of new regulations.
