The Independent Community Bankers of America said in a recent letter to the CFPB that the watchdog’s final mortgage rules should be adjusted to avoid restricting consumer access to home loans.
The ICBA said that, while the CFPB rules do carve out exemptions for community banks, the bureau should expand on the measure to ensure small-market consumer access to credit, TimesUnion.com reports.
“Community banks have always been responsible home mortgage lenders and did not participate in lending abuses that drove the financial crisis,” ICBA President and CEO Camden Fine said, according to TimesUnion.com. “However, the quest to address the sins of less scrupulous and unregulated mortgage lenders could have a negative impact on common-sense community banks and the customers they serve. The CFPB should modify its final rule on qualified mortgages to ensure continued access to the mortgage market for Main Street communities.”
Additionally, the ICBA said that while the CFPB rule allows flexibility for community institutions to offer mortgage loans, the exemptions provided do not cover nearly enough community banks, which could force many institutions out of the market and leave many consumers without access to credit.
The ICBA recommended that the CFPB expand the definition of a “qualified mortgage” to include loans held in portfolio by small creditors, increase to 1,000 per year the number of loans retained in portfolio to qualify as a community bank lender, expand the definition of “rural” for balloon mortgages and escrow requirements to include all counties outside metropolitan areas and all towns with fewer than 50,000 residents, exclude mortgage loan originator compensation in the fees calculation for loans that receive a “QM” designation and extend QM safe harbor protection for refinancing mortgage loans after the Jan. 10 effective date of the rules, TimesUnion.com reports.