ABA Banking Journal - June 2014 - (Page 4)

ABA chairman's view BY JEFF PLAGGE Home lending changes: more than just a hassle H "ABA is proposing improvements to rules that are making mortgage lending UNAPPEALING AND EXPENSIVE" JEFF PLAGGE President and CEO, Northwest Financial Corp., Arnolds Park, Iowa 4| ABA BANKING JOURNAL | JUNE 2014 omeownership has always been a big part of the American dream. But for banks, the Dodd-Frank Act and new rules to implement it have made the home-loan business significantly more complicated for banks and our customers. Many banks feel compelled to limit the kinds of mortgage loans they offer to protect themselves from legal liability. Others are getting out of the mortgage servicing business because Basel III requirements have made it so expensive. This is a problem. And you may have heard me say that we bankers cannot make our problems our customers' problems. If regulators tell us we need to jump through five hoops before we can close on a loan, we'll do our best to keep that from inconveniencing our borrowers. But sometimes we cannot shield our customers and communities from the effects of new policy. Sometimes the unintended consequences are not just a hassle for banks, they are potentially harmful to the economy. A recent report from the Financial Stability Oversight Council helps validate this. It flagged the alarming growth of nonbank mortgage servicers as a potential threat. That growth-fueled in part by the outflow of mortgage servicing rights (MSRs) from banks to less regulated nonbanks-is no coincidence. It is a direct result of Basel III's punitive treatment of mortgage servicing assets on bank books. I took the opportunity of the FSOC report to write to Treasury Secretary Jack Lew, and suggest a regulatory solution that ABA had formulated to stem the outflow of MSRs from banks. We need more focus on the cause of the MSR outflow, and we must find a fix that allows banks to continue to service our customers' mortgages. ABA is similarly proposing corrections and improvements to other rules that are making mortgage lending so complicated and expensive. Under the guidance of a special ABA-state association regulatory relief task force, we have pushed hard for bills that would deem any loan made by a lender and held in portfolio as a "qualified mortgage," and would provide exemptions for smaller institutions from Dodd-Frank's escrow and servicing requirements. On the compliance side, ABA continues to work closely with the Consumer Financial Protection Bureau to seek clarifications on how the new mortgage rules will be applied. We also have recently expanded our suite of endorsed mortgage solutions to include a wholesale option for community banks' mortgage sales offered through Sterne Agee Mortgage. This allows banks to serve customers while eliminating some of the risk and ensuring regulatory compliance. (See p. 53.) Finally, ABA is taking advantage of June as American Housing Month to remind consumers that banks are there to help them navigate their housing and loan choices. It's important that anyone who is considering buying a home contact his bank first. Our job may have gotten harder in the back room, but banks will continue to work to meet the financial needs of our customers. Our message to homeowners must be that banks are open for business.

Table of Contents for the Digital Edition of ABA Banking Journal - June 2014

Chairman's View
Editor's Column
The Economy
Bank Notes
Picture This
Affordable housing pioneer
Pass the Aspirin
Tech Topics
Lines of defense
Top performing community banks
Compliance Clinic
Compliance Inbox
Around the ABA
Legal Issues
First Person

ABA Banking Journal - June 2014

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