Small community banks are working toward exemption from some of the Consumer Financial Protection Bureau’s new regulations on mortgages, Bloomberg Businessweek reports based on an interview with the Independent Community Bankers of America.
The agency has called on CFPB Director Richard Cordray to limit the reach of forthcoming rules on mortgage disclosures and underwriting standards, Businessweek reports.
The demands reflect a rising conviction among community banks that the bureau won’t deliver on its promise to write regulations that serve consumers while also reducing the burden on smaller banks, according to Camden Fine, president of the community bankers trade association.
“The concepts have to be reduced to actual rules with details, and the details are getting in the way of the concepts,” Fine said in an interview.
Since Harvard professor Elizabeth Warren started setting up the new agency in September 2010, forging an alliance with community banks has been a centerpiece of its strategy.
… The community bankers are seeking an exemption for banks that do very few mortgages from the CFPB’s marquee project, a simplification of federally mandated disclosures that consumers get when shopping and signing for a mortgage, Fine said.
The group also raised with Cordray the possibility of limiting the application of its so-called qualified mortgage rule, Fine said. The rule, known as “QM,” would provide a degree of legal protection for banks who follow certain underwriting rules in case a loan goes bad.
David Silberman, the CFPB’s associate director of research, markets and regulations, said in an e-mail that the agency is still considering whether “adjustments to particular rules for smaller entities are warranted in particular circumstances.” He also argued that compliance costs can decline if rules are clearer.
Written by Elizabeth Ecker