“The ICBA is very concerned that many of the new proposed mortgage rules will actually cause community banks in particular to experience high costs with very little benefit to the customer,” ICBA CEO and President Cam Fine said, according to the Washington Post. “When regulatory agencies act – not just the CFPB – they act with a broad brush…they are sweeping in the innocent along with the guilty.”
The CFPB’s new mortgage rules tighten lending standards and stipulate that lenders must provide enhanced disclosures to potential consumers. The new rules are part of an effort to prevent a repeat of the mortgage-lending crisis that led to the financial collapse in 2008.
Fine argues that small community banks typically take fewer financial risks than non-banks, take steps to keep up with the loans and avoid selling off bad mortgages, the Washington Post reports. The new rules, however, will apply to all mortgage lenders, including small banks. Fine said that such a move may increase the cost of mortgages across the industry.
“It’s going to be harder for the average first-time homebuyer to get a mortgage,” Fine said, according to the Washington Post. “That market will be more constricted.”
Fine said that the CFPB has been making an effort to analyze the effect of such a measure on community banks.
“I will give the CFPB credit – they’ve not only reached out to us, but also individual bankers and have contacted other stakeholders within [the] financial services industry. Their outreach is broad and deep,” Fine said, adding that his organization has been meeting weekly with the CFPB since the installation of the agency, the Washington Post reports.
Fine said that though the outreach is a good sign, it remains unclear whether the CFPB will adjust.
“At this point, if you can judge by their words, they understand our points. Now we’re waiting to see if they translate that into action,” Fine said, according to the Washington Post.