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ICBA Community Banker Urges Congress: “Don’t Tamper With Our Success”

Washington, D.C. (August 2, 2011)—Jack Hopkins, a third-generation community banker and president and CEO of CorTrust Bank in Mitchell, S.D., urged Congress today on behalf of the Independent Community Bankers of America (ICBA) to not add additional regulatory burden on the nation’s community banks, which are servicing their loan portfolios successfully and have not contributed to widely reported problems. 

“We must preserve community banks role in mortgage servicing because the alternative is further consolidation, which will only harm borrowers, especially those in rural and underserved housing markets,” Hopkins said today in his testimony before the Senate Banking Committee. “Servicing is working exceptionally well in the community banking sector.  As Congress and the agencies consider national servicing standards, they must recognize community banks have fundamentally different standards, practices and risks.  Overly prescriptive requirements should not be applied across the board.” 

Examples of overly prescriptive requirements include: rigid timelines for making contacts that leave no discretion to the servicer; mandatory property inspections; establishing a single point of contact; creating a special servicing group for delinquent loans; significant oversight of third-party providers; and annual independent audits of controls and processes. 

“The most significant risk in applying standards that are too rigid and prescriptive to all banks, regardless of size, is that the additional expense would surely cause many community banks to exit the mortgage-servicing business and accelerate consolidation,” Hopkins said.  “Rural and small town customers would be left with fewer mortgage choices, interest rates and fees would be less competitive and customer service and product choice would suffer.  Congress and the regulators must prevent community banks from being harmed by any newly proposed national standards.  I urge you not to tamper with our success.”

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