Bankers Remain Pessimistic on Regulatory Impact

Bank mortgage lenders are concerned that the current regulatory burden will result in a continued reduction of available credit, according to the American Bankers Association’s (ABA) 23rd Annual Real Estate Lending Survey.

The survey found 86 percent of the home loans originated last year by ABA member banks consisted of qualified mortgages (QM). But 72 percent of respondents believed that federal mortgage regulatory oversight by the Consumer Financial Protection Bureau (CFPB) will ultimately result in fewer people qualifying for home loans. Last year, the most cited reasons for a mortgage’s failure to meet QM standards were high debt-to-income levels and a lack of required documentation. The surveyed bankers also cited economic uncertainty and the interest rate environment as chief issues for concern.

“While banks continue to grapple with the overwhelming amount of new regulation in the mortgage space, we’re pleased that the market has shown some resiliency and adjustment,” said Robert Davis, ABA executive vice president. “Despite regulatory and economic headwinds, community banks have proven to be strongly committed to first-time homebuyers.”

The ABA also found that foreclosure rates at surveyed banks fell from 0.57 percent in 2014 to 0.37 percent in 2015, while the average delinquency rate for single family homes decreased from 1.76 percent to 1.27 percent. And the 30-year fixed-rate mortgage commanded 47.4 percent of all home loans in 2015, compared to 50.5 percent in 2014.