On the scene at ACUMA’S National Mortgage Conference – day three

So day 3 and the ACUMA National Mortgage Conference has come to a close. Nearly 300 credit union folks plus mortgage related vendors networked and were exposed to new ideas and updates on the current world of mortgage lending. If you haven’t attended an ACUMA conference in the past, you really should consider it. Nowhere can you find this much high level content for Credit Unions that want to be Memberlicious (As a side note disclosure, I am on the ACUMA Board).

Day 3 topics focused on the CFPB’s upcoming rules, NCUA’s attitudes on risk and GSE Reform. Not the kind of topics that get you excited about being a mortgage lender, but crucial to the future of mortgage lending. Keep on reading to find out today’s highlights….

Michael Calhoun from the Center for Responsible Lending gave perspective on a variety of issues. The most interesting point was his view on Qualified Mortgages. Michael seemed to indicate that the potential for litigation risk in doing non-Qualified Mortgage lending may be overstated. And here’s why. The ability to pay provision is related to the borrower’s ability to pay at the time of origination. So if the borrower makes their payments for a period of time and then stops paying, it will be difficult for them to argue that they did not have the ability to pay at the time of origination. So if you do not have many early defaults, maybe the risk isn’t too big. So think hard if you are considering not playing in the non-Qualified Mortgage space.

A representative from the NCUA, Tim Segerson, talked about the agency’s concerns on the amount of mortgage loans being held by Credit Unions related to interest rate risk. When coupled with the decline in core deposits (savings and checking) as a percentage of assets it becomes an even bigger issue. He indicated the agency does not want to see Credit Unions get out of the core business of mortgage lending, but wants to ensure we are effectively managing and mitigating the risk of rising interest rates. He suggested the following: use strategies to offset interest rate risk (including the pending derivative authority), hold more capital, manage liquidity well along with the funding side of the balance sheet more effectively and finally, place more consumer credits on the balance sheet because they have lower balances. Probably easier said than done, but valuable advice.

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