NASCUS Requests FTC Exempt SCUs from Mortgage Advertising Proposed Rule

Nov. 15, 2010 — NASCUS submitted a comment letter to the Federal Trade Commission (FTC) requesting an exemption for state-chartered credit unions (SCUs) from its proposed rule on unfair and deceptive acts and practices related to mortgage advertising.

The proposed rule, issued pursuant to the 2009 Omnibus Appropriations Act and the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (CARD Act) would (1) prohibit any misrepresentation in any commercial communication regarding any term of any mortgage credit product; and (2) impose recordkeeping requirements on covered entities. At issue for NASCUS is the fact that while the proposed rule would apply to state-chartered credit unions, there would be no similar additional requirements for federal credit unions, state or national banks.

NASCUS argued that while consumer protection is a critical regulatory issue, NASCUS does not support the extension of additional advertising rules and record retention requirements exclusively to a single depository charter, particularly when the proposed rules are duplicative of existing rules. Rather, NASCUS urged FTC to focus its efforts on filling in regulatory gaps and addressing non depository entities lacking the existing comprehensive regulation of credit unions and banks.

In its comment letter, NASCUS explains that a broad and comprehensive regulatory framework already exists for SCUs prohibiting the deceptive advertising practices covered by the proposed rule in the same manner as it does for exempted state banks, national banks and federal credit unions. Among the existing regulations are the Real Estate Settlement Procedures Act (RESPA); the Home Mortgage Disclosure Act (HMDA); the Homeowners Protection Act; the Federal Reserve Board's Regulation Z; and Truth in Lending. In addition to the laws cited above, federally insured, state-chartered credit unions also have specific prohibitions against misleading advertising in the National Credit Union Administration's (NCUA) share insurance rules.

NASCUS also points out that SCUs are highly regulated entities that are examined for consumer compliance in the same manner as federal credit unions, banks and other depository institutions.

NASCUS will continue its dialogue with the FTC about exempting SCUs from this proposed rule. To view our comment letter, follow this link.