Expansion of HOEFA could hurt market, economy, ABA warns

Bob Davis

The American Bankers Association said in a Friday letter to the Consumer Financial Protection Bureau that the agency’s proposed expansion of the Home Ownership and Equity Protection Act could cause market disruptions.

“We believe that the enormous expansions of HOEPA’s application and coverage have not been properly calibrate and unleashing them on the market—especially in conjunction with all the other mortgage-related changes—will cause disruptions across all market segments,” the ABA said. “We strongly urge that deeper and more careful consideration be given to the proposed rules and request that the [CFPB] engage in more analysis of the adverse impact that these rules will have on consumers and lending institutions.”

Additionally, executive vice president Bob Davis urged the CFPB to forego expansion of the definition of “finance charge,” which could shift annual percentage rate calculations and other figures tied to APR.

Davis cited several technical compliance issues that need to be resolved, adding that a minimum of 18 months after the rules were finalized would be required to reprogram bank and vendor systems, allow for staff training and to establish necessary compliance requirements.

Rates tied to the proposal could cause lending interruptions. The ABA said that “the risks of the consequences arising out of the proposed rules and other regulatory reforms, taken together significant.

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