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.