League advocacy comment letters
Published by: Emily Leite
May 19, 2021 | Regulatory
The National Credit Union Administration, NCUA, has proposed adding an ”S” (Sensitivity to Market Risk) component to the existing CAMEL rating system and redefining the ”L” (Liquidity Risk) component, thus updating the rating system from CAMEL to CAMELS. The proposal to add the ”S” component will enhance transparency and allow the NCUA, State Supervisory Authorities, and federally insured credit unions to better distinguish between liquidity risk (”L”) and sensitivity to market risk (”S”). The amendment would also enhance consistency between the regulation of credit unions and other financial institutions. The League fully supports the proposal, as we believe it promotes transparency in the rating system. However, we cautioned the NCUA not to move too fast in terms of the timing of implementation. Please find the League’s comment letter regarding the CAMELS rating here.
Additionally, the CFPB published a proposed rule that would make a few significant amendments to Regulation X in connection with the ongoing COVID-19 pandemic. Perhaps most importantly, the proposal would institute a foreclosure moratorium preventing any mortgage servicer from referring a delinquent mortgage on a borrower’s primary residence for foreclosure until after Dec. 31, 2021. The CFPB claims the goal is to prevent mortgage servicers from being inundated and loans falling through the cracks in October and November with borrowers rolling off forbearance. It also claims the period is intended to allow borrowers more time to review options because they are overwhelmed.
While the League is generally supportive of protecting borrowers from foreclosures, this measure was overly broad and not sufficiently tied to COVID-19 related circumstances. Moreover, their assessment of a foreclosure cliff is inaccurate given the relatively low number of current mortgage-loan delinquencies. Please find the League’s comment letter regarding the foreclosure moratorium here.
If you have any questions about the CAMELS Rating or Foreclosure Moratorium proposals, please contact League Regulatory Counsel Chris Noble.
T: (614) 923-9762
C: (614) 448-6237