Points CUNA Will Raise in Our Comment Letter on "Finance Charge" Definition
Proposed Definition of “Finance Charge” Included in the CFPB’s Proposal to Combine TILA and RESPA Home Mortgage Disclosures, Docket No. CFPB-2012-0028
· The proposed definition of “finance charge” was addressed in the agency’s proposal to combine home mortgage disclosure forms under TILA and RESPA.
· CUNA is filing a separate letter on other provisions of that proposal.
· CUNA opposes expanding the definition of the “finance charge” under Section 1026.4 of Regulation Z, particularly at this time.
· In general, our concerns with the CFPB’s proposed approach to the definition of “finance charge” are:
° The CFPB has said that expansion of the definition would subject more mortgage loans to additional limitations and requirements under the Home Ownership Equity Protection Act (HOEPA) and other provisions.
° CUNA is working with members of the CUNA Lending Council and our Consumer Protection Subcommittee to assess this.
° Meanwhile, the CFPB has not provided sufficient evidence that consumers will benefit from the expanded definition.
° The agency has not sufficiently assessed the impact of the expanded definition on financial institutions, including credit unions.
° While the CFPB has authority to change the definition of “finance charge,” it was not directed to do so by the Dodd-Frank Act.
° The timing of this proposed expansion could not be worse, given the range of other mortgage-related issues that lenders will have to contend with that are required by the Dodd-Frank Act.
° At the appropriate time, CUNA would like to work with the CFPB to pursue changes to TILA that would improve and simplify cost-of-credit disclosures for consumers and creditors.
° Borrowers would like to know the amount of their periodic payments; the total amount to be repaid; the total number of payments; total fees and possible penalties; and possibly total interest rate payments.
° We believe that simplified disclosures could be developed that would provide consumers with a clearer understanding of the information they care most about, without imposing more complicated requirements on financial institutions, such as credit unions.
° If the CFPB decides to go forward with this proposal, we urge the agency to delay implementation of it for 18-24 months, consistent with the implementation timetable CUNA is urging for other mortgage-related requirements.