Community bankers: CFPB must modify QM rule

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Community bankers are urging the Consumer Financial Protection Bureau to revise the current qualified mortgage rule.

In a letter to CFPB Director Richard Cordray, the Independent Community Bankers of America say that the rule must be revised to ensure that community banks can continue to serve local mortgage markets without being crushed by compliance costs.

The ICBA urged Cordray to allow loans held in small creditors’ portfolios to automatically receive “safe harbor” status as long as they’re held in those portfolios. The ICBA also wants a small-creditor exemption from current escrow requirements for higher-priced loans. The group says current QM and escrow rules make it too expensive for smaller banks to issue mortgage loans to some customers.

"Community banks operate under a completely different business model than that of the larger financial institutions and mortgage companies,” the ICBA letter said. “They underwrite based on firsthand knowledge of their customers and communities, and thrive on the strength of their reputations. As such, community banks have every incentive to make fair, safe, and affordable loans.”

“…These loans are not sold into the secondary market but are kept in portfolio which gives the banks a vested interest in the loans’ performance,” the ICBA added. “Therefore, additional underwriting and escrow requirements only function as unnecessary regulatory burdens that stifle community banks’ ability to provide solid loan products to consumers so they can achieve the American dream of home ownership. This reality seems inconsistent with the CFPB’s mission which is ‘to make markets for consumer financial products and services work for Americans.’”
 
COMMENTS
  • gheinecke on 7/23/2014 10:58:23 AM

    Welcome to the world of the Broker. Imagine excessive costs and oversight. We do quarterly reports, have given the buyer the right to sue us as of January 10, 2014 if they miss their payments and are limited to doing mortgages at 2.75%. To say nothing of annual re-certifications with every investor, continuing education annually along with passing these requirements being prohibited from being reimbursed for rapid rescore or extra credit costs, and having to absorb third party verification source costs. To say nothing of taking a test I doubt many bankers could pass. Also banks NEVER disclose what they make and calculate APR differently. In fact I doubt that few "bankers " on the platform even understand how to calculate the APR correctly. Only thing good was the background checks and preventing those bad apples from committing fraud by going from State to State.

  • on 7/23/2014 11:52:15 AM

    The mortgage business used to be a profession, but due to all the changes it is turning into a perfect position for someone that doesn't need that much income. The people in charge of making the changes basically have no knowledge of what we go through, live in their big homes, and make a great income. They don't have someone telling them how much they can make and definitely would not have liked to take a pay cut like mortgage brokers.

  • Gmac on 7/23/2014 12:10:55 PM

    Are you listening, CFPB and Congress? You have been repeatedly warned that actions (DODD Frank and the CFPB) you have taken would severely curtail credit availability for borrowers of smaller amounts of money. All of these actions are overcorrection for errors of the past that free markets corrected for immediately after the collapse. Not only are those at the lower end of the economic food chain devastated, but our economy has been restricted by severe artificial underwriting requirements that are overkill. Wake up America! Support the bills being promulgated in Congress to repeal Dodd Frank and eliminate the CFPB. The only legitimate way the CFPB can serve consumers is by fostering comprehensive financial education for school children and any adults who want it. It has proven disastrous as can now be plainly seen to have this rogue agency operating without proper checks and balances. Educate the citizenry, YES! telling merchants (in this case of home mortgages) how much to sell their products for, ABSOLUTELY NOT. Economic justice is best achieved by free men and women through free enterprise with educated consumers. This is a concept that made this country a world leader over the last 200 years. Why do you want to reverse our proven success?

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