Stricklin said Tower has created a matrix of real estate loan products that evaluates each in regard to how they will be affected by the new mortgage rules, whether or not they will be purchased by GSEs, and if not, the effect on interest rate risk to hold them on the balance sheet.

In response to a question from the audience regarding a potential private market for non-QM loans, Stricklin said that Raj Date, the former deputy director for the Consumer Financial Protection Bureau, is in the process of building a firm that will create a secondary market for the loans.

And, he said, the GSEs may reverse or modify their decision to not purchase mortgages that don't fall into the qualified mortgage category.

“It's hard to say what they are going to do,” Stricklin said. “Twelve months from now, will they buy a 40-year loan? Because as rates go up, you're going to reach a point where a 40-year product will be important for first-time homebuyers, and they'll face political pressure to support that. So you may see GSEs decide to buy them.”

However, he cautioned, credit unions can't count on an accessible non-QM secondary market or a policy change from Fannie or Freddie.

“You have to be comfortable that if you're putting something in portfolio, you can keep it there. Sure, you may be able to sell it down the road, but there's no guarantee,” Stricklin said.

Once the matrix is complete, Stricklin said, management should share the information with volunteers.

“If you're going to start eliminating products, it will probably have to go to the board. And, even if you're not going to eliminate anything, at a minimum at least present it to the board so they know what's going on,” he said.

Rules that require new disclosures and additional statement requirements will make it impossible for credit unions that offer real estate loans to continue providing combined statements to members, Stricklin said.

That will mean additional costs, he said, but added that eSign Act rules can make the process less painful.

“What the CFPB decided is that these statements don't have to comply with the eSign Act,” he said. “They will allow presumed consent, which means if a member has said they are OK with receiving statements electronically, you can assume they are also OK with getting these new statements electronically.”

The cost difference is significant, he said. At Tower, electronic statements cost $2 per member to deliver annually, compared to $9 for paper statements delivered by mail. That would mean $70,000 worth of annual savings if 10,000 could be delivered electronically, Stricklin said.

“So take advantage of that,” he said. “Because the eSign Act doesn't apply, all members have to do is give a verbal okay to receiving it electronically. Use your front line people. Have them ask members about it. The more of that you can do, the less it will cost.”