ICBA Policy Resolutions for 2013
ICBA Priorities for 2013

MORTGAGE SERVICING

Position

• Community banks should be exempt from CFPB rules designed to address abuses in large bank mortgage servicing.
  
  
• The CFPB should carefully coordinate the implementation of all the proposed mortgage rule makings to minimize the cost and impact on both community banks and consumers.

Background

Community bank mortgage loan servicing is based on close ties to customers and communities. Community banks have not perpetrated recent abuses in servicing and should be exempt from any prescriptive rules that make servicing too costly for them.

Servicing helps community banks remain competitive in the mortgage origination business. Today, community banks represent approximately 20 percent of the mortgage market. Community bank mortgage lending is particularly important in rural areas and small towns of this country, which are not effectively served by large banks. For many rural and small town borrowers, a community bank loan is the only mortgage option. Any broad based recovery of the housing market must involve community bank mortgage lending.

Mortgage Servicing Rulemaking. ICBA supports proposals by the CFPB to address mortgage servicing abuses by the large national mortgage servicers. However, community banks did not perpetrate the abuses that the Dodd-Frank Act and CFPB mortgage servicing rules are seeking to address. Accordingly, ICBA supports exemptions for community banks to various provisions of the proposed servicing rules. Community banks should be able to continue with their current practices for servicing mortgage loans held in portfolio and not be subject to more prescriptive and costly requirements designed for larger national mortgage servicers.

Staff contacts: Ron Haynie, Renee Rappaport

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