MBA's Kittle calls for balance in efforts to improve mortgage regulationMortgagePress.comDavid G. Kittle, Mortgage Bankers Association, House Financial Services Committee, HR 1728, Mortgage Improvement and Regulation Act, Mortgage Reform and Anti-Predatory Lending Act of 2009
David G. Kittle, CMB, chairman of the Mortgage Bankers
Association (MBA), recently testified before the House Financial
Services Committee at a hearing on HR 1728, the Mortgage Reform and
Anti-Predatory Lending Act of 2009. In his testimony, he reiterated
MBA's commitment to working to with legislators and other policy
makers to improve regulation of the mortgage market.
"If carefully crafted, improved regulation is the best path to
restoring investor and consumer confidence in the nation's housing
market," said Kittle. "At the same time, if regulatory schemes are
not well conceived, they risk worsening a credit crisis that
trillions of taxpayer dollars have yet to resolve."
In his testimony, Kittle highlighted MBA's comprehensive
proposal to ensure federal regulation for the mortgage industry and
establish uniform lending and servicing standards for the entire
country. That proposal, the Mortgage Improvement and Regulation Act
(MIRA), would incorporate major pieces of H.R. 3915, which passed
the House of Representatives in 2007, as well as codify consumer
protections finalized by the Federal Reserve in 2008.
"We believe MIRA represents our industry's commitment to fixing
the problems in the market. We know that the current crisis
requires a bold response and we believe that MIRA would achieve
this, while ensuring a vibrant credit market in the future" added
In reference to the current bill before the committee, Kittle
applauded its comprehensive nature, but expressed reservations
about a number of provisions.
"First and foremost, HR 1728 does not establish a national
standard for mortgage lending to replace the uneven patchwork of
state and local mortgage lending laws," Kittle said. "We are just
as concerned about the requirement that lenders retain at least
five percent of the credit risk presented by non-qualified
According to Kittle, the risk retention provision would make it
impossible for many lenders to compete, especially non-depository
lenders who do not keep significant cash on hand but rather rely on
warehouse lines of credit. This idea would ultimately narrow
choices, lessen credit and significantly increase costs to
"Lenders already have skin in the game by virtue of their
representations and responsibilities to investors," Kittle pointed
Kittle also expressed concerns that the definition of a
"qualified mortgage" is too limited. According to Kittle, HR 1728
would raise costs on broad categories of safe mortgage products,
including loans with adjustable rates, many jumbo loans, fixed 15,
20, 25 and 40-year loans, FHA, VA and Rural Housing loans, as well
as some Fannie Mae and Freddie Mac mortgages.
He urged the committee to provide more flexible standards that
will still protect borrowers. MBA suggests a new regulator should
have the authority to allow loans to be "qualified" unless they
contain higher risk features like negative amortization provisions
or no-documentation, ensuring that sound credit options remain
available to the full range of borrowers.
For a full copy of Kittle's testimony, click
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