August 3, 2009

NASCUS Files Comments with FTC Requesting SCU Exemption from New Mortgage Lending Regulations

ARLINGTON, Va. -On July 30, NASCUS filed a comment letter in response to a Federal Trade Commission (FTC) Advanced Notice of Proposed Rulemaking (ANPR) on mortgage acts and practices. NASCUS requested that state-chartered credit unions be exempted from this rulemaking.

The Omnibus Appropriations Act of 2009, signed into law in March, directed the FTC to initiate a rulemaking with respect to mortgage loans. FTC commenced with rulemaking addressing practices with regard to mortgage loan advertising and marketing, origination, appraisals and servicing. Given its broad discretion, FTC chose to extend its rulemaking to cover those over which the FTC has jurisdiction under the FTC Act — which includes state-chartered credit unions, but excludes banks, thrifts and federal credit unions.

NASCUS' comment letter, while supportive of FTC's goal of consumer protection, urges the FTC to exempt state-chartered credit unions on the grounds that state-chartered credit unions are one, highly regulated entities; and two, would suffer a disparate impact in the marketplace with little offsetting benefit to consumers if only state-charters are subject to this rule.

"The end result of this rulemaking would require state-chartered credit unions to follow Commission rules while their depository institution counterparts would not. This would prove confusing and counter-productive," stated NASCUS. "Given the thorough regulations, including regulation of mortgage practices of state-chartered credit unions, the negative effect on competition resulting from the inequitable treatment of one kind of depository institution outweighs any de minimis benefit to consumers."

In addition, subjecting state-charters to this rule exclusively among depository institutions could confuse consumers. NASCUS also pointed out that credit union members are uniquely empowered to vindicate their rights through the board election process. To view NASCUS' comment letter, follow this link.

Information Contact:
Kate Hartig, VP, Public Relations and Legislative Affairs, (703) 528-0669 or
The NASCUS mission is to enhance state credit union supervision and advocate a safe and sound state credit union system.