Small lenders take aim at unfair compliance

by MPA10 Jun 2013

Small lenders and originators have put forward legislation they say will protect them from "unfair and unreasonable" federal regulations.

The Community Mortgage Lenders of America (CMLA) has today released proposed legislation it says will protect consumers while shielding smaller mortgage lenders from "excessive" regulation aimed at large institutions. The group said its proposed legislation, The Community Mortgage Lenders Act of 2013, would seek "reasonable" regulatory corrections to deal compliance relief to small community lenders with no history of predatory loan practices, and who deal predominantly in QM loans.

CMLA chair Mark McDougald claimed the legislation would help free up resources for more lending without compromising the goals of the Dodd-Frank Act.

"The Dodd-Frank Act created the CFPB and other regulatory controls to crack down on pernicious lending practices and to improve the transparency in lending markets, but small community bankers and lenders were not responsible for the mortgage crisis, and should not face excessive regulatory oversight and additional cost burdens," he said.

The legislation would exempt small community lenders from the current seven-day waiting period requirement, the three-day waiting period if terms improve foor the borrower, new servicing rules the CMLA says target "impersonal shops", auditing of third-party vendors and CFPB examination authority. Community lenders would also be exempt from Basel III capital requirements, and would receive relief from portions of the SAFE Act "as it applies to a bifurcated mortgage loan originator standards". The CMLA also called for community lenders' entire book of business to receive QM protection.

McDougald said the legislation would help smaller lenders burdened by compliance aimed at large lenders.

"While we all agree that consumers deserve protection from abusive products and practices, we remain deeply concerned that a 'one size fits all' approach will significantly disadvantage small, community-based lenders that did not create the meltdown, and don't have the resources to hire an additional staff to comply with rules aimed at larger institutions," he said.


  • by RICHARD H MOHLER | 6/10/2013 10:45:20 AM


  • by Scott | 6/10/2013 12:39:32 PM

    Amen, Brother...
    We are a small 1951 chartered Credit Union who has never sold any mortgage of any type... the SAFE act has no caveat of exemption if you do not have intent to sell or sellable paper. Most ridiculous indeed.

  • by Alette | 6/11/2013 12:58:31 PM

    I have been a mortgage broker for 27 years and always done everything by the book. This over regulation makes it impossible for a small lender to stay in business. If you take out all the competition the banks will charge whatever they wish and there will be price fixing. If their goal is to drive out all the small lenders they are doing a fine job of it.


Is TILA-RESPA a good or bad thing long term?