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ICBA Statement on Federal Reserve’s Proposed Rule on ‘Higher Priced’ Mortgages

Washington, D.C. (Dec. 18, 2007)—Camden Fine, president and CEO of the Independent Community Bankers of America (ICBA), issued the following statement upon release of the Federal Reserve Board's proposed changes to Regulation Z (Truth in Lending) under the Home Ownership Equity Protection Act (HOEPA):

"The Federal Reserve Board's proposal to address unfair or deceptive home mortgage lending and advertising practices is an important step in putting an end to predatory lending. The steps the Federal Reserve proposes will generally enhance protections for consumers while avoiding proposals that would curtail the availability of credit. ICBA commends the Federal Reserve for focusing attention on high-cost loans, since that is where the most problems have occurred. However, the thresholds that the Federal Reserve proposes for defining high-cost loans are problematic and cover many more loans than we believe are intended to be covered, unnecessarily further restricting credit.

"ICBA supports appropriate restrictions on prepayment penalties and income verification requirements for 'higher priced' loans and is not opposed to requiring tax and insurance escrows for such loans, though this may result in added operating costs for small lenders as they establish new systems. We also support the Federal Reserve's efforts to stop misleading advertising and inflated appraisals.

"Our nation's community banks are not cutting back on lending. Community banks have money to lend and want to work with consumers looking for credit solutions.

"ICBA looks forward to working closely with the Federal Reserve and other interested parties to develop an appropriate final rule."