The Community Mortgage Lenders of America (CMLA) Releases The Community Mortgage Lenders Act of 2013 To Exempt Responsible, Community-based Banking And Lending From Unfair And Unreasonable Federal Regulations

BOSTON and WASHINGTON, June 10, 2013 /PRNewswire-USNewswire/ -- The Community Mortgage Lenders of America (CMLA) today released legislation (The Community Mortgage Lenders Act of 2013) to spur more lending, maintain effective street-level consumer protections, and preserve the franchises of America's community lenders by removing excessive regulations aimed for other parts of the market. 

To achieve these goals, The Community Mortgage Lenders Act of 2013 seeks reasonable legislative and regulatory corrections to provide compliance relief to community lenders under the following tests: (1) small lenders, with (2) no history of predatory or abusive loan practices, where (3) the lender's loan product is predominantly "QM" under today's reform definitions. 

In this approach, the CMLA believes mortgage markets would free up resources for more lending while not compromising the overall goals of the Dodd-Frank Act.

"The Dodd-Frank Act created the CFPB and other regulatory controls to crack down on pernicious lending practices and to improve the transparency in lending markets," said Mark McDougald of FirstTrust Mortgage in Overland Park, KS and Chair of the CMLA.  "But, small community bankers and lenders were not responsible for the mortgage crisis, and should not face excessive regulatory oversight and additional cost burdens.  While we all agree that consumers deserve protection from abusive products and practices, we remain deeply concerned that a 'one size fits all' approach will significantly disadvantage small, community-based lenders that did not create the meltdown, and don't have the resources to hire an additional staff to comply with rules aimed at larger institutions."

Small lenders have limited ability to absorb more overhead costs; for every additional compliance person hired, the cost of that salary means additional costs passed on to the American family seeking to buy a home and grow the economy.  The responsible community lender remains a critical component to preserving a competitive marketplace by preventing further concentration of the market among the nation's largest lenders that were responsible for the financial crisis.    

Under the proposed legislation, responsible community lenders will be exempt from the 7-day waiting period requirement, the 3-day waiting period if terms improve for the consumer, new servicing rules targeting impersonal shops, auditing of third party vendors, and CFPB examination authority (unless a referral comes from a state or federal regulator).  Community lenders will be exempt from the additional capital requirements called upon by Basel III.  Community lenders will receive relief from portions of current SAFE Act standards as it applies to a bifurcated mortgage loan originator standards.  And, community lenders will be exempt from the costs of collecting non-consumer impacting data or conducting statistical analysis of disparate impact and other far-reaching and costly exercises.  To improve underwriting flexibility to better serve local markets, the community lenders' entire book of business will receive QM protection.

"A number of market observers, as well as our membership, remain concerned that increased regulatory costs will ultimately drive good community-based lenders out of the business, increasing the overall market concentration among the nation's largest lenders that has already grown exponentially as a result of the new regulatory burden," said Larry Bell, VP of Residential Lending, of the Bank of Idaho in Pocatello, Idaho. 

Charles Ferraro, President at William Raveis Mortgage, a New England based lender with a leading presence in Massachusetts, New York, and New Jersey, added: "We believe this legislation affirms the original goal of Dodd-Frank, and at the same time, will ensure that regulators' efforts focus on those aspects of the mortgage industry that need more comprehensive oversight." 

Paulina McGrath, President at Republic State Mortgage in Houston, TX added: "More than any other part of our vital industry, community-based lenders assure the access to credit which first-time homebuyers and low- to moderate-income borrowers need to realize a piece of the American Dream.  Equally important, community lenders are exactly the kind of small businesses and local employer's policymakers should be encouraging to spur economic growth and help job-seeking Americans."

About the CMLA
The CMLA is a national community mortgage banking trade association representing Main Street community mortgage bankers. Founded in 2009, the CMLA is dedicated to providing a voice for the independent community based mortgage banker. The CMLA is founded on the principal that a thriving independent mortgage banking sector increases competition in the industry and provides borrowers with greater choice resulting in lower costs and innovative products.  For more information, visit www.thecmla.com, or call Kevin M. Cuff, Executive Director, 978.239.5612.

Contact: Kevin M. Cuff, 978.239.5612 
Rob Zimmer, 202.494.4551

SOURCE Community Mortgage Lenders of America