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ICBA Testifies Before Congress on Need to Limit Negative Impact of New Mortgage Rules

Washington, D.C. (Jan. 14, 2014)—The Independent Community Bankers of America’s® (ICBA) today urged Congress to advance legislation to limit the adverse consequences of new Consumer Financial Protection Bureau mortgage rules. Testifying before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit, ICBA Vice Chairman Jack Hartings said the CFPB’s Qualified Mortgage rule has the potential to drive many community banks with fewer resources out of the mortgage market, curtail access to mortgage credit and hamper the housing recovery.

“There is no question that the new Qualified Mortgage (QM) rule will adversely impact my mortgage lending,” said Hartings, who is also president and CEO of the Peoples Bank Co. in Coldwater, Ohio. “As a result, certain loans we made in the past to accommodate customers will not be made in the future.”

In ICBA’s testimony, Hartings testified that the QM rule will limit mortgage lending by community banks, which currently represent approximately 20 percent of the national mortgage market. He noted that the rule will restrict the availability of low-dollar-amount loans, balloon-payment mortgage loans, higher-priced mortgage loans and other safe, legitimate loans that will fail to meet the QM definition. He called on policymakers to expand the “small creditor” definition under the QM rule by raising the loan-volume threshold above 500 mortgages and disregarding loans sold into the secondary market.

Hartings also called on the committee to advance ICBA-advocated legislation that offers a simple, straightforward approach—offering safe harbor QM status for community bank loans held in portfolio, including balloon loans in rural and non-rural areas and without regard to their pricing. This solution supports continued access to community bank credit without compromising consumer protection or safety and soundness, he noted.

This solution is included in legislation introduced by members of the House Financial Services Committee, including:

  • the Protecting American Taxpayers and Homeowners Act (H.R. 2767), introduced by Chairman Jeb Hensarling (R-Texas) and Rep. Scott Garrett (R-N.J.),
  • the CLEAR Relief Act (H.R. 1750), introduced by Rep. Blaine Luetkemeyer (R-Mo.), and
  • the Portfolio Lending and Mortgage Access Act of 2013 (H.R. 2673) and CFPB Rural Designation Petition and Correction Act (H.R. 2672), introduced by Rep. Andy Barr (R-Ky.).

ICBA will continue working with Congress to pursue a solution to mitigate the negative impact of the CFPB mortgage rules on community bank mortgage lending. For more information and to read ICBA’s testimony, visit www.icba.org.

About ICBA
The Independent Community Bankers of America®, the nation’s voice for nearly 7,000 community banks of all sizes and charter types, is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education and high-quality products and services. For more information, visit www.icba.org.

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