MCUA Supports CFPB Efforts to Delay Credit Insurance Prohibition
The Missouri Credit Union Association (MCUA) filed a letter strongly supporting the Consumer Financial Protection Bureau (CFPB) proposal to delay the June 1, 2013 effective date of the prohibition on creditors financing of mortgage credit insurance premiums.The letter was filed on May 24, 2013.
The Mortgage Loan Originator Compensation Rule Supplementary Information is unclear as to whether adding any monthly charge for credit insurance to the loan balance—a common practice for credit unions whose data processing systems add the insurance premium amount to the loan balance on a monthly basis—is prohibited. Changing these systems would be all but impossible before the June 1, 2013 effective date in the current final rule.
In addition to the proposal to delay the effective date of the provision, the CFPB will issue a second, more substantive proposal in June, which is expected to seek public comment on both the scope of the prohibition and its new effective date. The proposal may also contain clarifications on the rule’s applicability to transactions other than those in which a lump-sum premium/fee is added to the loan amount at closing.
MCUA reinforced its appreciation to the CFPB for it’s willingness to listen to the views of credit unions and work with them on this issue.