Mortgage Banking Industry Attacks Portions of Housing Bill
Wednesday, June 25, 2008
Several regulatory and mortgage banking associations sent a letter to U.S. Senators Chris Dodd (D-Conn) and Richard Shelby (R-AL) this week, saying proposed legislation--including the introduction of new licensing guidelines for lenders--will raise legal questions and limit credit for mortgage consumers.
“We strongly support the passage of GSE reform legislation and believe the GSE legislation approved by the Senate Banking Committee addresses the critical reforms needed to strengthen the housing finance system,” the six organizations said. “We also support the proposed 'Hope for Homeowners' FHA refinance program to provide additional assistance to help the most at-risk homeowners. The FHA refinance program should be accompanied by final passage of FHA Modernization to ensure FHA can meet its new challenges.”
However, the agencies that signed the bill—which include the American Financial Services Association, the Consumer Bankers Association, the Consumer Mortgage Coalition, the Housing Policy Council, the Mortgage Bankers Association and the U.S. Chamber of Commerce—voiced their reservations about Title VI of the licensing and registration legislation.
The agencies added, “Unfortunately, notwithstanding efforts by the Senate Banking Committee, the licensing provisions found in Title VI of the bill do not meet the test of accountability and reliability, and in addition, impose suitability requirements on employees of lending institutions which are impossible for them to meet. Therefore, we urge that Title VI be separated from the rest of the bill and be considered separately once the licensing and registration provisions are perfected. We would support prompt modifications that address the problems in the lender licensing and registration provisions, but believe that Title VI may need more review before it is ready for passage.”
The agencies criticize Title VI for:
- hurting lenders and creating uncertainty in the origination and underwriting processes through strict suitability standards
- inadequate financial controls
- privacy concerns related to the pulling of FICO scores by licensing agencies
- breaches in individual privacy that may exist with implementation of the new guidelines Kerri Panchuk
“We strongly support the passage of GSE reform legislation and believe the GSE legislation approved by the Senate Banking Committee addresses the critical reforms needed to strengthen the housing finance system,” the six organizations said. “We also support the proposed 'Hope for Homeowners' FHA refinance program to provide additional assistance to help the most at-risk homeowners. The FHA refinance program should be accompanied by final passage of FHA Modernization to ensure FHA can meet its new challenges.”
However, the agencies that signed the bill—which include the American Financial Services Association, the Consumer Bankers Association, the Consumer Mortgage Coalition, the Housing Policy Council, the Mortgage Bankers Association and the U.S. Chamber of Commerce—voiced their reservations about Title VI of the licensing and registration legislation.
The agencies added, “Unfortunately, notwithstanding efforts by the Senate Banking Committee, the licensing provisions found in Title VI of the bill do not meet the test of accountability and reliability, and in addition, impose suitability requirements on employees of lending institutions which are impossible for them to meet. Therefore, we urge that Title VI be separated from the rest of the bill and be considered separately once the licensing and registration provisions are perfected. We would support prompt modifications that address the problems in the lender licensing and registration provisions, but believe that Title VI may need more review before it is ready for passage.”
The agencies criticize Title VI for:
- hurting lenders and creating uncertainty in the origination and underwriting processes through strict suitability standards
- inadequate financial controls
- privacy concerns related to the pulling of FICO scores by licensing agencies
- breaches in individual privacy that may exist with implementation of the new guidelines Kerri Panchuk
