CFPB Proposal

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Just days after Frank Keating, the President and CEO of the American Bankers Association, used an Old Testament analogy to challenge lawmakers to amend the Dodd-Frank Act to work better to achieve its intended purpose, the CFPB has announced a proposal that would redefine the definition of “small creditor” and “rural” under its mortgage rules.

In an opinion column published in USA Today last week, Keating wrote that “No one ever confused Capitol Hill for Mount Sinai. But some today think the Dodd-Frank Act is as set in stone as the two tablets of the Ten Commandments. That’s the wrong way to think about any legislation. Every law can be improved, and Dodd-Frank is no exception. Sometimes there are drafting errors. Sometimes a good idea in theory turns out to be unworkable after a closer look in the light of day.”

Keating pointed to two aspects of Dodd-Frank he and many industry participants believe hamper the ability of community banks and credit unions to serve their communities. The CFPB’s proposal would address aspects of both concerns, as well as others:

  • Allowing banks to receive “qualified mortgage” status if they decide to keep the loans on their books instead of selling them in the secondary market. This would make it easier for people to get mortgages and for community banks not to be penalized for meeting the lending needs of the community it serves.
  • Creation of a “simple appeals” process that would allow banks in rural and underserved areas to obtain a second opinion when a regulator mistakenly labels a rural customer as urban. The current process can get in the way of community banks making good loans to creditworthy customers.

In his January 29th press conference, CFPB Director Richard Cordray stated that “responsible lending by community banks and credit unions did not cause the financial crisis, and our mortgage rules reflect the fact that small institutions play a vital role in many communities. Today’s proposal will help consumers in rural or underserved areas access the mortgage credit they need, while still maintaining these important new consumer protections.”

Valuation Management Group (VMG), along with the American Bankers Association (ABA), the National Association of Federal Credit Unions (NAFCU), and the Independent Community Bankers of America (ICBA) welcomed news of the proposal. Valuation Management Group stands with their clients in support of the proposal.

Comments are open for public comment until March 30, 2015. You can obtain a copy of the proposal, here.

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 appraisal process from ordinary to extraordinary.

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