Regulation

ABA’s Keating: CFPB rules have unintended consequences on Latinos

Frank Keating

Frank Keating

Frank Keating, the president and CEO of the American Bankers Association, said new CFPB regulations on mortgages have disproportionately affected the Latino community, making it difficult for them to obtain a mortgage.

“The new rules are well-intentioned,” Keating said, according to The Huffington Post. “In an effort to protect borrowers, they have very strict requirements, requiring a lender to thoroughly document a customer’s ability to repay the loan. Unfortunately, the way these rules have been implemented has left many bankers in hazy territory. They have created a lot of uncertainty about what happens if a lender makes a loan outside of a narrow set of boundaries, and the uncertainty makes it harder for potential customers.”

Keating said it may be harder for Latinos, many of whom are more likely to work seasonal jobs or be self-employed, to prove their income in the way regulations now require.

He also said Latinos are more likely to share housing or rent out rooms to help meet housing costs. Rental income, however, cannot be counted towards determining a borrower’s ability to repay.

“We know no one intended to crimp mortgage credit for the Latino community,” Keating said, The Huffington Post reports. “But that’s what we are observing, and only Congress and the regulators can undo these unintended consequences. Nobody should stand in the way of creditworthy Latino homebuyers.”

A number of new CFPB mortgage regulations recently took effect, including the qualified mortgage and ability-to-repay rule, which would require lenders to determine whether a borrower can repay a loan before it is issued.

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