FOR IMMEDIATE RELEASE
ICBA Cautions Lawmakers About New Mortgage Disclosure Rules
Washington, D.C. (May 22, 2008)—The Independent Community Bankers of America (ICBA) cautioned Congress about a new regulatory proposal that would significantly change residential mortgage disclosures and elements of the mortgage transaction to the detriment of small lenders and settlement service providers while potentially increasing the cost of homeownership at a time when the mortgage market is facing serious challenges.
“ICBA has long supported mortgage disclosures that are simple and easy to understand, clearly specifying the obligations and responsibilities of all parties,” ICBA said in a written statement to the House Small Business Committee which held a hearing today on the impact of proposed Real Estate Settlement Procedures Act (RESPA) regulations on small business. “Disclosures should focus on the information consumers want most--the principal amount of the loan, the simple interest rate on the promissory note, and the amount of the monthly payment--at the appropriate stage of a transaction to allow them to make informed decisions and to shop for the best mortgage for their situation.”
“If HUD goes forward with the proposed rule, community banks and other small businesses will face significant burdens in implementing the changes due to changes in systems and forms, and employee training,” ICBA said in its statement. “It will be far more difficult for community banks to absorb the costs as they have relatively low mortgage volume to spread the costs over as compared to larger loan originators. The rule also addresses the use of volume based discounts and average cost pricing, factors that make it difficult for smaller lenders and settlement service providers to compete against larger ones.”
ICBA also wrote that HUD’s proposed amendments to its RESPA rules “significantly and substantially change mortgage disclosures and elements of the mortgage transaction,” and noted that the changes “do not reflect the realities of the mortgage market and industry, may cause more serious disruption and increase the cost of homeownership at a critical time when lenders and borrowers are endeavoring to work through many challenges.” Further, ICBA raised serious concerns about the lack of consistency between HUD’s proposal and amendments to Regulation Z (Truth in Lending) proposed by the Federal Reserve and existing laws and regulations.
ICBA thanks House Small Business Chairwoman Nydia Velazquez (D-NY) for holding this important RESPA hearing. Read ICBA’s complete statement at www.icba.org.