Industry head calls for delay of CFPB rules

by Ryan Smith26 Sep 2013

Banks won’t be ready to follow new mortgage rules slated to take effect Jan. 1, according to the head of an industry trade group.

Speaking at an industry conference in Omaha Tuesday, Matthew Williams, chairman of the American Bankers Association, said banks need the Consumer Financial Protection Bureau’s “qualified mortgage” rules to be delayed six months to a year, or some might be forced to cut back on mortgage lending to avoid legal issues.

The new CFPB rules are intended to prevent lenders from giving mortgage loans to borrowers who can’t repay them. The rules are slated to take effect next year, but Williams said that software companies are still developing programs that banks will need to follow them, according to a report by the Omaha World-Herald.

“Our business is loaning money, but (regulators) have created roadblocks to stop us from doing what we do best,” Williams said.“That’s our lifeblood as bankers.”

CFPB Director Richard Cordray said last week that it was “critical to move forward so that these rules can deliver the new protections intended for consumers and the certainty that the industry has been seeking.” But Williams said that although many bankers agree with the new regulations, they need time to prepare for compliance.

Others in the industry agree. In July, more than 50 industry groups signed a letter asking for implementation of the rules to be delayed so mortgage lending wouldn’t be thrown into a tailspin by a “rush to compliance,” the World-Herald reported.


  • by Michelle | 9/26/2013 10:37:30 AM

    The lenders that are able to implement the new rules quickly will be the ones to excel & profit, and that is how it should be. Pushing back the implementation date just helps out the bigger slower lenders. 2 bad! I say if you can't implement the new guidelines in an efficient way, then you shouldn't be in business.

  • by Deb | 9/28/2013 7:11:59 AM

    Banks and brokers have been aware of these changes that are coming for a LONG time. My institution started implementing them on their own in the spring of this year. Although we had some unhappy mortgage applicants who were able to go to a smaller local bank and get a mortgage at the time, the borrowers are finding out that the playing field is being leveled. No more sub-prime lending; if a borrower has a FICO of less than 620, that's a pretty good indicator that they may not repay the mortgage! I understand there are exceptions such as large medical bills, but by and large the majority of the borrowers that I see with low scores have charged off credit cards, unpaid utility collections, and generally poor payment history. If banks want to lend to these customers, then the banks should be accountable for covering those risks. Period.


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