Tag Archives: American Bankers Association
9 Apr

Dodd-Frank Regulations Pose a ‘Serious Challenge’

From DSNews April 8, 2014

The latest version of the Dodd-Frank mortgage regulations has bankers worried about lending, and their fear has already affected who can qualify for mortgage loans.

On Monday, the American Bankers Association [1] (ABA) released the results of its latest annual Real Estate Lending Survey [2], which clearly show signs of caution among loan officers. According to the ABA, more than 80 percent of bankers surveyed believe that tightened Dodd-Frank rules will restrict credit, thereby narrowing the pool of candidates able to secure mortgages.

In January, the Consumer Finance Protection Bureau implemented Regulation Z [3], which prohibits lenders from making a higher-priced mortgage loan without regard to the consumer’s ability to pay it back. This change swiftly led lenders to alter who they saw as viable mortgage loan candidates as they figure out how to do business within the confines of tighter controls.

“The new mortgage rules are a serious challenge, especially in the near term, for mortgage lending,” said Robert Davis, EVP of the American Bankers Association. “The problem will last at least as long as bankers calibrate their compliance systems, and perhaps much longer.”

According to the ABA, more than a third of bankers surveyed said they would only offer qualified mortgages. Another third said they would offer non-qualified mortgages, but only to targeted customers. A full 95 percent of those who say they will offer non-QMs plan to hold the loan as a portfolio investment. Five percent say they would sell the loan to secondary market investors.

More than anything, bankers are concerned with the increasing burden of ever-tightening regulation and with meeting the cost of compliance, which has yet to be assessed. It should be noted, however, that three-quarters of the organizations surveyed were financial institutions with less than $1 billion in assets.

Still, not all news is bad. Despite the worries, the ABA survey shows an uptick in the percentage of single-family mortgage loans made to first-time home buyers, from 11 to 13, last year. This is the highest percentage since 2007. Also, 30-year fixed-rate mortgages made up half of all mortgages in 2013, and the purchase market increased from 39 to 44 percent of mortgage originations.

Also, despite concerns, only 11 percent of institutions surveyed say they are contemplating selling servicing rights due to new regulatory requirements or capital treatment of mortgage servicing rights.


URL to article: http://dsnews.com/dodd-frank-regulations-pose-serious-challenge/

CFPB Director Speaks at American Bankers Association

22 Oct

At the American Bankers Association’s annual conference in New Orleans this week, Consumer Financial Protection Bureau (CFPB) Director Richard Cordray said loan originators face huge advantages under the agency’s mortgage rules that will take effect January.


The CFPB issued its Ability-to-Repay rule—also known as the Qualified Mortgage or QM rule—earlier this year in order to prevent bad lending practices.  The purpose of the rule is to make sure consumers are getting mortgages they can afford to pay back.


In addition to the QM rule, CFPB also issued mortgage servicing rules designed to correct many “sloppy and unsatisfactory practices” and to ensure fairer and more effective processes for borrowers at risk of losing their homes.


Both rules were “desperately needed” by the financial industry, Cordray said, as they have paved the way for the agency to issue guidance on how to comply with them, while also helping to resolve ambiguities and unclear interpretations when the rules were proposed in January 2013.


“For example, under the statute you would not have been permitted to charge any points or fees on any loan on which you paid compensation to any loan originator, regardless of whether that was your own employee or a mortgage broker,” Cordray said.


CFPB specified the effective date of its mortgage rules for January 2014.


“The central concept behind this project is our belief that compliance with regulations is a concern we all share, because successful compliance is good for everyone—consumers, industry, and regulators,” Cordray said. “We believe that working together makes the process go more smoothly, attains greater understanding, and helps achieve better results.”


“We believe that such a marketplace is the right outcome for all involved, and will lead to more stable and sustainable financial conditions that strengthen the future of this country,” Cordray said.
adapted from Reverse Mortgage Daily