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ICBA Tells Congress Community Banks Are Stable, Well-Capitalized and Ready to Assist Homeowners

Community Banks Welcome Return to Common-Sense Underwriting

Washington, D.C. (Sept. 19, 2007)—The Independent Community Bankers of America (ICBA) told Congress that despite uncertainty in the mortgage sector; community banks are stable, well-capitalized and prepared to assist homeowners in their communities.

"Community banks welcome a return to the common-sense underwriting that they have always offered," said Camden Fine, ICBA president and CEO. "The nation's community banks are weathering the current credit storm because they are well-run, well-capitalized and among the most highly regulated financial institutions in the country. While in recent years some lenders have been more concerned with which loan was best for them, community banks have always been concerned with which loan is best for their customers."

ICBA submitted a statement to the House Financial Services Committee which is holding a hearing on Thursday Sept. 20 to discuss possible legislative and regulatory solutions to the rising number of mortgage foreclosures. In its statement, ICBA said that the association:

  • Strongly opposes predatory lending practices and believes that these practices should be stopped. Existing anti-predatory lending laws and regulations should be enforced and new proposals aimed at high-cost loans.

  • Is not opposed to requiring tax and insurance escrows for subprime loans, although this would be expensive and may cause some community banks to stop their limited subprime loan offerings.

  • Supports restrictions on prepayment penalties.

  • Believes that stated income loans have been used inappropriately and supports clear disclosure to the borrower of the loan type, terms and income claimed.

  • Supports requiring lenders to underwrite loans to the fully indexed rate and to fully amortize payments.

  • Does not support unnecessary and unduly costly registration and licensing of community bank employees, since community banks are already highly regulated financial institutions subject to strict lending and employment standards.

ICBA looks forward to working with Congress and the regulatory agencies to find solutions that benefit American consumers and communities, without adversely affecting the community banks that serve them. Read ICBA's full statement at www.icba.org.