FOR IMMEDIATE RELEASE
ICBA to Congress: Focus Mortgage Reforms On Market’s Problem Areas
Washington, D.C. (April 23, 2009)—The Independent Community Bankers of America (ICBA) today urged Congress to focus mortgage reforms on companies that engaged in imprudent and abusive lending practices, such as less-regulated mortgage brokers and non-bank lenders, and to avoid creating a mortgage finance system that could make it more difficult for credit-worthy consumers to obtain credit if it is too rigid to respond to changing interest rate and lending environments, and customer needs.
“Our nation’s more than 8,000 community banks are the bright spot in the struggling mortgage market because they made smart loans and did not engage in the risky practices that contributed to the current crisis,” said R. Michael Menzies, ICBA chairman and president and CEO of Easton Bank and Trust in Easton, Md., in his testimony to the House Financial Services Committee. “ICBA supports sound mortgage reforms to prevent abusive mortgages and help preserve our local economies and urges Congress not to diminish the ability of community banks to serve Main Street America.”
Menzies warned that new lending standards proposed under the Mortgage Reform and Anti-Predatory Lending Act of 2009 (H.R. 1728) could produce excessive rigidity in the mortgage market that could affect access to credit and keep community banks from meeting customers’ needs. Menzies urged that a broader range of safe mortgage products, not just certain 30-year fixed rate loans, qualify as “safe harbor” loans that meet the standards laid out in the bill.
Menzies also said ICBA supports provisions that would prevent lenders from steering consumers to subprime products when they qualify for prime loans, but urged Congress to focus on non-bank mortgage originators, the sector where regulation is needed most.
ICBA looks forward to working with Congress to create a regulatory regime that prevents abusive mortgages, while providing the mortgage finance industry flexibility to meet consumers’ needs.
To read ICBA’s testimony, visit www.icba.org.