ICBA and other groups recommended ways that prudential regulators could expand access to mortgage credit while preserving prudent risk management standards.
Recommendations: In a joint letter to the Federal Reserve, FDIC, and OCC regarding an executive order on promoting access to mortgage credit, ICBA and others recommended:
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Increasing the residential appraisal exemption threshold from $400,000 to $625,000 and indexing it annually to reflect housing price appreciation, while maintaining evaluation requirements and safety-and-soundness safeguards.
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Allowing automated collateral-review tools to be used for primary appraisal reviews without requiring case-by-case regulator approval, provided institutions maintain appropriate model risk management and validation controls.
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Expanding the use of alternative valuation methods, including desktop, hybrid, virtual, and customer-assisted inspections, to improve efficiency and reduce delays for lower-risk mortgage transactions.
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Updating the definition of “high value and complex transactions” by revisiting the current $1 million threshold.
Background: President Donald Trump in March issued an executive order directing regulatory reforms that will help community banks promote housing affordability. In a national news release, ICBA said it strongly supports reforms to mortgage requirements, HMDA reporting rules, capital and liquidity standards, and more to provide community banks with regulatory relief that will support mortgage lending.
CFPB Effort: ICBA in May said it supported Consumer Financial Protection Bureau efforts to implement regulatory changes outlined in the EO, such as providing regulatory relief for community banks that play a critical role in providing relationship-based mortgage lending and supporting local housing markets.