Contradictory rules have made mortgage lending a "minefield" for bankers, threatening the housing recovery, it has been claimed.
ABA President and CEO Frank Keating - writing in a Wall Street Journal op-ed - has claimed decisions by HUD and the CFPB have made the regulatory landscape difficult for lenders to navigate.
The "minefield", Keating said, results from the Housing and Urban Development Department’s decision to use disparate impact analysis to enforce fair lending laws on the one hand, and the CFPB’s Qualified Mortgage standards on the other hand.
The problem is that none of these agencies are willing to state that they’re not going to pursue lenders for disparate impact violations that result from decision to loan only QM
loans, Stephanie Robinson, a partner at K&L Gates told MPA.
To clear up the issue and reduce uncertainty for bankers and their customers, Keating said, regulators should modify the rules to ensure no conflict exists. If they do not “clear the minefield” before the CFPB’s January 10 compliance date, he explained, “the ultimate casualties will be the nascent housing recovery and the American home buyer.”
In the meantime, the best thing that lenders can do is document their business justification very carefully.
“If the lender has articulated its business reasons, and shown that there’s not a less discriminatory alternative that would work with their business, the enforcement agencies should accept that,” Robinson said.