Executive order provides much-needed, long-sought mortgage relief to credit unions

An Executive Order (EO) issued Friday provides credit unions and other community financial institutions with relief related to the Home Mortgage Disclosure Act (HMDA) and other mortgage laws, rules, and regulations. America’s Credit Unions has consistently advocated for HMDA relief for credit unions, including in a letter sent to the CFPB last month, and Friday’s EO contains many provisions it has called for. 

“America’s Credit Unions welcomes the administration’s actions to expand responsible access to mortgage credit and reduce unnecessary regulatory burdens that make it harder for community-based lenders to serve their members. Throughout their history, credit unions have led our nation in providing affordable, flexible mortgage loans for working Americans. This Executive Order will reduce regulatory obstacles to credit unions helping more Americans achieve the dream of homeownership,” said America’s Credit Unions President/CEO Scott Simpson. “Importantly, this effort includes federal regulators such as the NCUA, ensuring credit unions are part of the broader conversation about modernizing mortgage rules. America’s Credit Unions has asked repeatedly for many of the commonsense reforms in this Executive Order. 

“For example, America’s Credit Unions specifically urged policymakers several times to revisit HMDA reporting requirements, as increasingly complex HMDA reporting rules were driving up compliance costs for community lenders without improving outcomes for borrowers,” he added. “This is exactly the type of targeted regulatory relief credit unions have been calling for.

“Credit unions remain committed to responsible lending and transparency while helping more families achieve homeownership. We look forward to working with the administration, Congress, and regulators to ensure these reforms.”

America’s Credit Unions-requested relief in the EO includes:

• Tailoring qualified mortgage/ability to repay tailoring for smaller financial institutions;
• Shifting to correction-first examination treatment and risk-based supervision;
• Increasing the HMDA reporting threshold and reducing reporting burdens;
• Tailoring risk weights for mortgages and mortgage servicing rights;
• Reforming Federal Home Loan Bank (FHLB) access and affordable housing reform;
• Permitting FHLB access to the Fed’s discount window;
• Directing the Federal Housing Finance Agency to submit a report on the efficiency of national housing finance markets;
• Revising supervisory guidance to exclude one-to four-family residential development and construction lending from commercial real estate concentration guidance;
• Modernizing, simplifying, and reducing appraisal requirements;
• Standardizing the use of e-signatures and remote online notarization;
• Aligning supervisory expectations to support portfolio mortgage servicing as a core community banking function;
• Limiting enforcement to willful violations, and allowing self-remediation; and
• Eliminating duplicative mortgage loan originator licensing requirements.

Another EO issued Friday is designed to address “unnecessary regulatory barriers, slow permitting processes, and onerous mandates at all levels of government have delayed construction, restricted development, and driven up the costs of new housing.” This EO focuses more on housing development, not financial institutions. 

“We support efforts to expand the nation’s housing supply and address the affordability challenges facing families across the country. Credit unions work every day with first-time homebuyers, young families, and working Americans who are struggling to find homes they can afford in today’s tight housing market,” Simpson said. “Policies that streamline barriers to housing while encouraging new residential development can help bring more homes to market and expand opportunities for families. Credit unions are committed to helping their members achieve the dream of homeownership and supporting responsible housing development in the communities they serve. “We look forward to working with policymakers to ensure these efforts strengthen housing availability and expand access to affordable mortgage financing for families, veterans, and working people,” he added.