ICBA cautions lawmakers about new mortgage disclosure rulesMortgagePress.comICBA, community bankers, Congress, mortgage disclusures, House Small Business Committee, RESPA, HUD proposed rule
The Independent Community Bankers of America (ICBA) cautioned
Congress about a new regulatory proposal that would significantly
change residential mortgage disclosures and elements of the
mortgage transaction to the detriment of small lenders and
settlement service providers while potentially increasing the cost
of homeownership at a time when the mortgage market is facing
"ICBA has long supported mortgage disclosures that are simple
and easy to understand, clearly specifying the obligations and
responsibilities of all parties," ICBA said in a written statement
to the House Small Business Committee which held a hearing on June
12 on the impact of proposed Real Estate Settlement Procedures Act
(RESPA) regulations on small business. "Disclosures should focus on
the information consumers want most--the principal amount of the
loan, the simple interest rate on the promissory note, and the
amount of the monthly payment--at the appropriate stage of a
transaction to allow them to make informed decisions and to shop
for the best mortgage for their situation."
"If HUD goes forward with the proposed rule, community banks and
other small businesses will face significant burdens in
implementing the changes due to changes in systems and forms, and
employee training," ICBA said in its statement. "It will be far
more difficult for community banks to absorb the costs as they have
relatively low mortgage volume to spread the costs over as compared
to larger loan originators. The rule also addresses the use of
volume based discounts and average cost pricing, factors that make
it difficult for smaller lenders and settlement service providers
to compete against larger ones."
ICBA also wrote that HUD's proposed amendments to its RESPA
rules "significantly and substantially change mortgage disclosures
and elements of the mortgage transaction," and noted that the
changes "do not reflect the realities of the mortgage market and
industry, may cause more serious disruption and increase the cost
of homeownership at a critical time when lenders and borrowers are
endeavoring to work through many challenges."
Further, ICBA raised serious concerns about the lack of
consistency between HUDs proposal and amendments to Regulation Z
(Truth in Lending) proposed by the Federal Reserve and existing
laws and regulations.
ICBA thanks House Small Business Chairwoman Nydia Velazquez
(D-NY) for holding this important RESPA hearing.
Read ICBA's complete statement at www.icba.org.