|From Maryland Steve Greene contributes, “I do business in the DC Metro area and years ago a prominent Realtor offered the following observation: ‘Lenders should root for a Democratic victory. When they win, a bunch of new Democrats move to DC, buy homes, and apply for mortgages. When Republicans win, they move here and pay cash.’”
Scott Olson, Executive Director of the Community Home Lenders Association, writes, “In your daily commentary I noticed your extensive comments about the CFPB, including comparisons of banks and non-banks. Our press release below relates to a big disparity between treatment of banks and non-banks – 99% of banks are exempt from CFPB exams and primary enforcement authority – but zero non-banks are treated that way. That is why the Williams bill is important – it would move modestly toward more parity on this issue.
The second point – the qualifications of individual loan originators – remember 100% of individual non-bank mortgage originators have to pass the SAFE Act test, pass an independent background check and must take SAFE Act pre-licensing and continuing education courses – while zero bank loan originators have to comply with these things.
“Community lenders are community lenders, whether bank or non-bank – and therefore we believe smaller community non-bank lenders should receive comparable treatment – thus our focus on the Williams bill. The CHLA offers its strong support for H.R. 5907, the ‘Community Mortgage Lender Regulatory Act of 2016,’ legislation introduced by Rep. Roger Williams (R-TX). The bill would make better use of the CFPB’s resources to protect consumers – streamlining CFPB regulation of smaller community-based non-bank lenders by providing exam and primary enforcement exemptions that 99% of banks (those under $10 billion in assets) already enjoy.
“The bill would target CFPB supervisory and enforcement resources where they are most needed – on the larger lenders, while maintaining strong consumer protections. The bill extends the same type of CFPB regulatory authority that currently applies to 99% of banks to smaller ‘responsible community lenders.’ To qualify a non-bank mortgage lender must have net worth of less than $50 million, have originated fewer than 25,000 loans or $5 billion in loans the preceding year, and have originated at least 95% of their mortgage loans as Qualified Mortgage (QM) loans the last three years.
“As currently applies to most banks, a qualifying ‘responsible community lender’ would not be subject to a CFPB exam – although such lenders will continue to be regulated and examined by every state they do business in. Similarly, like the banks, the CFPB could not initiate enforcement action unless such action is requested by a lender’s primary regulator or any federal agency or regulator.”
And Glen Corso, Executive Director of the Community Mortgage Lenders of America, writes, “The CMLA applauds Rep. Roger Williams (R-TX) for introducing legislation that will bring common sense to regulatory oversight of small, community-based mortgage lenders. CMLA has called for equitable regulatory treatment of small lenders and the Community Mortgage Lenders Regulatory Act of 2016 would achieve that. CMLA Chair Brooke Anderson Tompkins noted this legislation ‘would prioritize CFPB oversight where it will most directly benefit consumers: onto our nation’s largest lenders and lenders that have clearly run afoul of sound lending rules. Responsible community lenders offering plain vanilla mortgage products did not cause the downturn or harm consumers. Rep. Williams’ bill strikes a balance of maintaining safe lending while freeing up resources so that more qualified Americans can get a mortgage to help build their families’ futures.’ Importantly, the bill codifies the definition of a ‘responsible’ community mortgage lender and exempts them from CFPB examinations and enforcement absent a separate referral from a state or Federal regulator.”