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Recently, CUToday interviewed our very own VP of Compliance Gaye DeCesare in an article about Reg Relief S.2155. Gaye, who is also head of our outsourced compliance service, has been in the credit union compliance arena for more than 25 years, had some serious opinions about the matter: how the benefits have been inflated, and how confusion around the changes cause more harm than good (hint: don't do anything sudden!) Scroll on to read the full article published in CUToday.
“We are finding that credit unions are confused, they don’t know what to do, and they are desperately looking for help,” said Gaye DeCesare, VP of Compliance and head of compliance services at CU Service Network. “I think down the road we will see some relief, but there is no relief right now. These changes are going to cost credit unions money—at least in the short term due to greater compliance concerns.”
The only immediate relief is not very big and it deals with member business loans, said DeCesare. As CUToday.info has reported, one-to-four family residential units that are used as rental properties will not count toward the member business lending cap of 12.25% of the credit union’s assets.
“This means credit unions can offer more business loans, which makes them revenue. Unfortunately, NCUA hasn’t issued any real guidance on the change and credit unions are looking at this new regulation and assuming that these aren’t business loans anymore—but they are,” said DeCesare. “These loans still have to be categorized as business loans and are subject to member business loan rules.”
Another change in the reg relief bill applies to HMDA coverage, which will provide some relief, said DeCesare.
“They have raised the transaction threshold so that credit unions that do fewer than 500 closed-end mortgage loans and fewer than 500 open-end lines of credit in the two preceding years are now exempt from new data collection and reporting requirements,” explained DeCesare. “However, as with the MBL rule, the BCFP has not issued any guidance so credit unions are very confused now. They think, ‘Oh, we don’t have to report anymore.’ No, you now have to go back to pre-2018 reporting requirements. So all the tasks that credit unions have been working on for years to get ready for compliance with the 2018 HMDA amendments—form changes, data processing changes, training—all the work that has been done now has to be undone. It costs a great deal of money to change everything back, even if that may ultimately relieve some of the regulatory burden.”
Advice for Credit Unions
DeCesare emphasized that just because the relief act says a credit union doesn’t have to do something doesn’t mean that the current regulation has immediately changed.
“We are advising credit unions to just keep doing what they are doing—for now. Until the regulators actually change their regs, we still have to do it,” she said.
What DeCesare is most “excited” about from S. 2155, is that it indicates legislators realize credit unions and small community banks are different from big banks.
“I am optimistic this will carry over into future rulemakings,” he said. “Eventually, yes, the reg relief bill will actually provide some relief. But right now, credit unions are anxious and confused.”
Avoid Acting Prematurely
DeCesare advised credit unions to simply stay on top of the changing regulations.
“Don’t change anything prematurely. The BCFP, for example, is not great about telling credit unions when they have made something final, so credit unions must be diligent about researching and monitoring regs continually,” she said.
DeCesare said CU Service Network can help credit unions through this transition period by monitoring the regulations and what is happening in Washington for its clients.
“We know credit unions are already busy. The current regulatory burden is huge and it takes everything they have to simply stay on top of current requirements,” she said. “They don’t have the time and resources to do research and worry about ‘what if.’”