A recent survey of credit unions found that complying with the Dodd Frank Wall Street Reform and Consumer Protection Act of 2010 means that interest rates on loans will be higher, hiring will be reduced and third-party servicing will increase. Some financial institutions even intend to scale back mortgage originations.
The survey queried participants about the qualified mortgage rule and found that 38 percent said that their 2012 loan originations included loans that didn’t satisfy the QM rule. Of that group, non-QM production accounted for roughly 5 percent of overall volume.
While more than half have already begun implementing the ability-to-pay and QM rules, 44 percent of participants will stop originating loans that don’t meet the QM standard.
Another 44 percent indicated that they will reduce mortgage originations.
The findings were derived from a survey conducted by the National Association of Federal Credit Unions and reported in the NAFCU’s newsletter, Economic & CU Monitor.
More than three-quarters of the respondents indicated that they service residential loans. But 10 percent plan to utilize a third-party servicer as a result of the Consumer Financial Protection Bureau’s mortgage servicing rule.
Three-quarters of credit union servicers projected that it will cost less than $10,000 to implement the servicing rule. But 12 percent of the group projected initial setup costs to exceed $50,000.
When considering all the costs associated with complying with rules spawned from the Dodd-Frank act, 58 percent of those surveyed said interest rates on their loan products are higher as a result of complying with the law, and 21 percent said they would hire more staff if they weren’t burdened with compliance costs.
“An overwhelming majority of survey respondents have seen regulatory burdens increase (92.9 percent) and compliance costs increase (88.1 percent) since the Dodd -Frank Act was passed in July 2010,” the report said.
