New Rules Tighten Mortgage Lending

by Gwen Moritz  on Monday, Jan. 27, 2014 12:00 am  

Chuck Quick

Now, Quick said, regulators will be able to trace mortgage complaints back to the originating loan officer and take action if an originator is pumping out a high number of problem loans.

The Pendulum Swings

Neither McElmurry nor Quick wholeheartedly embraced the new CFPB mortgage requirements, and both said the pendulum of regulation had swung too far.

“Meeting requirements is now more important than the actual risk,” McElmurry complained.

“I don’t like having an agency that can overrule us,” Quick said.

But Quick paid the CFPB a compliment one rarely hears directed at a bureaucracy:

“The CFPB has made it real clear what they expect, and I think that if they make it clear enough, then we can work with it.”

What’s more, he said, the CFPB has shown leniency even toward mortgage lenders who weren’t able to meet every requirement of the new law by Jan. 10. “They are going to allow you to operate as long as you are moving in the right direction,” he said.

Larger mortgage operations expect mortgage lending to be less profitable because of the requirements, but small banks are worried that the CFPB rules will drive them out of the mortgage business completely.

The Independent Community Bankers of America has succeeded in getting legislation introduced that would give smaller lenders more leeway for holding mortgages in their loan portfolios and to make balloon loans.

The changes have come just in time for what McElmurry said is shaping up to be the first “normal” year for mortgage origination since homebuyer tax credits were introduced in 2008, followed by a rash of refinancing as mortgage rates fell to historic lows.

“At least nationally, we are going to be light on housing units from a population growth standpoint,” he said. “But we need consumer confidence to improve, at least where you aren’t worried about losing your job.”



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