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ICBA Supports Efforts to Ensure Qualified Mortgage Rules Do Not Limit Access to Credit

Washington, D.C. (May 29, 2013)— The Independent Community Bankers of America® (ICBA) today said it supports the Consumer Financial Protection Bureau’s (CFPB) efforts to shield community bank customers and communities from new restrictions on mortgage lending. ICBA said that the CFPB’s amendments to its ability-to-repay and qualified mortgage (QM) rules will help preserve access to mortgage credit in Main Street communities; however, regulators need to go further to adequately protect the customers of many community bank lenders.

“Community banks make sound mortgage loans and did not participate in the kinds of abuses that contributed to the housing and financial crisis,” said Bill Loving, ICBA chairman and president and CEO of Pendleton Community Bank in Franklin, W.Va. “Therefore, ICBA and the nation’s community bankers support the CFPB’s efforts to minimize the negative impact of its new ability-to-repay and qualified mortgage rules on Main Street communities. Nevertheless, more work needs to be done to ensure that consumers nationwide continue to have access to the mortgage market so our housing and financial systems can continue their recovery.”

Under the amendments to the ability-to-repay/QM rule, the CFPB established a new QM category for loans held in portfolio. Creditors that have less than $2 billion in assets and make 500 or fewer first-lien mortgages per year can now make balloon-payment mortgage loans and get QM safe harbor status. Additionally, balloon loans can be made for a two-year transition period while the bureau studies whether the definition of “rural” or “underserved” needs to be changed, as strongly advocated by ICBA. Further, these loans also can be originated at 3.5 percent over the average prime offer rate and still have QM safe harbor status and be exempt from new requirements on higher-priced mortgage loans. Finally, loan originator compensation will not be included in the 3 percent cap on points and fees.

ICBA’s recently released Community Bank Qualified Mortgage Survey found that the CFPB’s ability-to-repay and QM regulations would reduce access to mortgage credit for many Americans. Among its findings, the survey found that less than half of respondent community banks that currently make balloon-payment mortgage loans would qualify for the rule’s provision for balloon mortgages.

ICBA will continue working with the CFPB to ensure the bureau’s regulations adequately protect the customers of Main Street community bank lenders. For more information, 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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