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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 Kittle. 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 mortgages." 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 borrowers. "Lenders already have skin in the game by virtue of their representations and responsibilities to investors," Kittle pointed out. 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 here. For more information, visit www.mortgagebankers.org.