The Mortgage Bankers Association (MBA) believes the financial regulatory reform legislation, voted out of conference on Friday, while still needing improvement during the regulatory process, could have been much worse were it not for the efforts of MBA and its members. "We believe the progress that the conferees have made on risk retention and mortgage underwriting and home appraisals reflect an improved shift from what could have been much more harmful legislation," said MBA Chairman Robert E. Story Jr., CMB. "Mortgage lending is going to change as a result of this legislation. There will be increased costs associated and new regulatory burdens that will impact consumers and lenders. As the regulators begin work on the details, during the coming year MBA will continue to push for improvements to ensure a balance is struck between ensuring a safe, robust U.S. financial system, protecting consumers and avoiding negative impacts on credit availability."
"We have been saying for a while now that we support financial regulatory modernization, as long as it is done right and will not negatively impact borrowers or the system as a whole," said Story. "As we know the devil is in the details, there is still much work to be done through rule making and MBA will work on behalf of the real estate finance industry and consumers."
The language approved today directs regulators to create an exemption from risk retention for qualified residential mortgages, a concept brought to the debate through an MBA-supported amendment to the Senate bill by Sens. Landrieu, Hagan and Isakson. MBA was instrumental in the inclusion of the provision from Sen. Mike Crapo that would require regulators to consider alternate forms of risk retention that may be better suited for the commercial mortgage-backed securities (CMBS) market.
The committee also improved the mortgage underwriting section (Title XIV) by adding language requiring separate points and fees cap consideration for low-balance loans and loans in rural areas and removing the ability to repay requirement for certain government-insured refinances. And finally, the conference agreement preserves the ability for there to be a firewall between appraisers and loan officers, mortgage brokers and real estate agents and allows for improvement to the portability of appraisals to better enable borrowers to shop for their mortgages.
"MBA's efforts working with legislators from both parties were instrumental in removing some of the most detrimental aspects of the legislation. We look forward to working with the Administration and regulators to ensure that the implementation of the legislation does as much good, and as little harm, as possible."
For more information, visit www.mortgagebankers.org.