In a November 5th, 2013 letter to Richard Cordray, Director of the Consumer Financial Protection Bureau (CFPB), one hundred and eighteen members of the U. S. House of Representatives expressed their concern about the implementation of mortgage rules that are to become effective in January. Of particular concern is the Ability to Repay and Qualified Mortgage Standards.
Citing the fundamental change the new regulations will have on the mortgage lending industry and the complexity of the regulations, the letter urged the CFPB to entertain delaying implementation until January 1, 2015 to allow financial institutions adequate time to transition their systems and their procedures in order to be in compliance with the rules. The mortgage rules and amendments represent over 4,000 pages and house members wrote that community financial institutions with limited compliance resources will likely not be in a position to comply with the new rules when they become effective. Potentially, implementation would cause serious disruptions in the mortgage market by hindering the availability of credit for consumers if financial institutions are not positioned to be in compliance with the rules.
Aside from the arguments outlined in the letter to the CFPB, you can view the letter here, many industry participants strongly believe that the rules will adversely impact low to moderate income consumers and further hinder a struggling economic recovery.
The letter closes with a request that the CFPB respond by December 1, 2013. To date, other mortgage industry groups have petitioned the CFPB to amend the new rules, or at the very least, delay their implementation – to no avail. It will be interesting to see the reaction and consequences if the CFPB proceeds with planned legislation despite more than 25 percent of the House urging the bureau to delay.
VMG understands many of our clients are in preparation for the changes and it is consuming a large amount of their resources and energy. Obviously, any law that is disruptive to the mortgage lending industry will impact housing sales and slow the housing appreciations recently experienced.
Valuation Management Group is a national, full service appraisal management company that manages the appraisal process for community banks, mortgage bankers and credit unions. We take the process from ordinary to extraordinary.