Speaking before a House Financial Services subcommittee, representatives from groups as disparate as Quicken Loans and Habitat for Humanity said the rules – largely the result of 2010’s Dodd-Frank Act – would hamper their ability to function.
Heads of community banks told the subcommittee that the new CFPB rules – particularly the Qualified Mortgage rule – will stifle their mortgage business.
“There is no question that the new Qualified Mortgage rule will adversely impact my mortgage lending,” said Jack Hartings, president and CEO of The Peoples Bank Company in Coldwater, Ohio. “This is true even though The Peoples Bank Company is currently a ‘small creditor’ under the QM
rule because we make fewer than 500 mortgage loans annually and have less than $2 billion in assets.”
“Approximately 10% of all of our mortgage loans in the last few years would be classified as non-QM
. Unfortunately today these loans, and the people they would have helped, are no longer being offered by my credit union,” said Daniel Weikenand, CEO of Orion Credit Union in Memphis, Tenn. “…At this time the uncertainty and the liability is just too great.”
Frank Spence, president and CEO of Habitat for Humanity in Charlotte, N.C., said even the charity would feel the pinch from the new rules.
“Although Habitat was never the target of Dodd-Frank, compliance (with the rules) has required significant commitments of both human and financial resources that would otherwise be invested in meeting critical housing needs…” Spencer said in testimony to subcommittee members.
Quicken Loans CEO William Emerson said the new rules would leave many prospective borrowers out in the cold.
“We remain concerned that (the CFPB rules) are likely to unduly tighten mortgage credit for a significant number of creditworthy families who seek to buy or refinance a home,” Emerson said. “While the housing market is improving, data show that the improvement is predominantly at the higher end of the market, with increasing activity in higher priced homes while the lower end of the market is actually shrinking. Access to credit is clearly constrained with first-time and low- to moderate-income borrowers unable to qualify for a mortgage.”
Mortgage and housing industry leaders took swipes at the Consumer Financial Protection Bureau’s new mortgage rules Tuesday during a congressional hearing.