Two Ways S. 2155 Will Affect Your Credit Union

Earlier this year, President Trump signed into law the Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155). This is a major win for credit unions and will have a tremendous impact. Here are a few highlights as to what the S. 2155 law means:

• Do away with some loan requirements in order for a mortgage to be considered “qualified.” Credit unions with less than $10 billion in assets will have certain mortgage loans deemed qualified while ensuring consumer protections are met as well.
• Provide regulatory relief to institutions that write fewer than 500 closed-end or 500 open-end home equity lines of credit in a one-year period. Exemption from regulatory compliance is not exempted if the credit union received a rating of “needs to improve” during the last two inspections, or a rating of “substantial noncompliance.”
• Reclassify one- to four-unit family dwellings, which are not the primary residence of the owner, so they do not count against the threshold for member business lending.
• Do away with mandated wait periods for lower mortgage rates. If a creditor gives a consumer a second offer with a lower percentage rate, the TILA/RESPA disclosure rule does not apply.
• Grant affordable mortgage access for members living in rural areas. This is a tailored exemption and has to do with the 1989 Financial Institutions Reform, Recovery and Enforcement Act. Members seeking mortgages under $400,000 are waived from certain appraisal requirements.
• Encourage credit lending by doing away with escrow requirements. If a credit union has less than $10 billion in assets, it could be exempt from some escrow requirements depending on the loan.

The Impact of S. 2155 on Credit Unions

So what does the passing of S. 2155 mean for credit unions? Ultimately, it means they will be able to focus more on the business of running a credit union, rather than funneling financial resources and employee time to ensure regulatory requirements are kept. In short, the choke collar will be lifted with easier lending regulations.

A 2017 Cornerstone Advisers Study suggested regulatory and compliance measures increased by $800 million over a two-year period. And that’s just the increase. The number really hits home when you break it down to the impact that regulation has on members. Each credit union member household pays $115 per year. S. 2155 will open up a wealth of opportunity for credit unions while removing the financial burden associated with regulation at the same time.

Two Ways S. 2155 Will Make a Positive Impact

Most of all, the Economic Growth, Regulatory Relief and Consumer Protection Act will make a difference for members. S. 2155 will pave the way for access to affordable home loans for members. In addition, the law will allow more members to receive business funding so their companies can expand.

Of course, as the regulations are lifted, changes will occur. Choose a credit union forms provider that will maintain ongoing compliance support to ensure your credit union is using the most up-to-date forms package. Once again the industry is changing, and you should trust in a forms provider that will be there to weather it with you. Only this time, it seems a celebration may be in order. Credit unions will finally be able to breathe a bit, and grow.

Richard Gallagher is CEO of Oak Tree Business Systems, Inc. He can be reached at 800-537-9598 or clientservices@oaktreebiz.com.