MBA exec slams CFPB, Dodd-Frank

by Anna Sobrevinas30 Mar 2017

On Tuesday, the chairman-elect and president of the Mortgage Bankers Association spoke about the impact of federal regulation on lending before the House Financial Services Committee’s Subcommittee on Financial Institutions and Consumer Credit.

David Motley, who also serves as president of mortgage banker Colonial Savings, tackled on the positive and negative effects of federal regulation in the industry.

“MBA has consistently supported reasonable requirements that will prevent a reemergence of housing and market disruptions,” Motley said. “We believe some aspects of the Dodd-Frank Wall Street Reform and Consumer Protection Act and other statutes have made the mortgage market safer; however, in many other respects the Dodd-Frank rules have reduced the availability and affordability of mortgage credit for many American families.”

Motley urged Congress to consider changes in QM loans, such as expanding their legal safe ground, increasing the small loan threshold for smaller-balance loans, setting up alternatives to QM underwriting and establishing a clear set of criteria to define QM.

He also tackled the expense of servicing loans, how it turns off lenders and how enforcement under the False Claims Act has led to uninterested FHA lenders with limited and defensive underwriting for borrowers.

Motley also said CFPB should provide more time-sensitive guidelines to investors and “adopt formal, risk-based standards for examinations” to lessen “regulatory burdens on independent mortgage bankers.”

“We urge this subcommittee to do a thorough review of these rules and regulations and make adjustments where necessary,” Motley said. “Done properly, we can balance the need for appropriate consumer protections while ensuring access to safe, sustainable mortgage credit.”

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Should CFPB have more supervision over credit agencies?