A new bill drafted in the Senate has mortgage bankers concerned about inconsistent regulations between states and skin-in-the-game requirements on securitized loans.
Senate Banking Committee Chairman Christopher Dodd has drafted legislation that includes the creation of a Financial Institutions Regulatory Administration — an aspect of the proposed law of interest to the Mortgage Bankers Association.
“MBA supports improved federal oversight of independent, non-depository mortgage lenders,” the association’s President and Chief Executive Officer John A. Courson said in a statement today. “MBA believes this could offer consistent uniform regulation to all lenders and brokers.”
The CEO said, however, that he understands “there are some agencies that may not warrant inclusion in such a new regulator.”
The American Bankers Association was less supportive of the proposed new regulator as proposed in Dodd’s draft, which “would tear apart the existing regulatory structure only to create a new one that would produce conflicts among regulators, undermine the state-chartered banking system, and impose extensive new regulatory burdens on those banks that had nothing to do with creating the financial crisis,” ABA President and CEO Edward L. Yingling said in a statement.
Yingling went on to criticize a proposed “single prudential regulator, which failed miserably in Great Britain.”
ABA also proposed the preservation of the federal thrift charter and opposed the creation of a Consumer Financial Protection Agency.
In addition, the bankers want to preserve federal preemption — something they have in common with their mortgage banking brethren.
MBA’s Courson warned that the proposed continued “patchwork of state and local lending laws” would confuse prospective borrowers and enable predatory lending.
Another provision of concern to MBA is one requiring lenders to retain an interest in securitized loans. In addition to placing certain business models at risk, the regulations would “deprive consumers and businesses of competition for safe and sustainable mortgage options and reduce the available funds for home financing by billions of dollars.”
The mortgage bankers also asked that reform of ratings agency regulation doesn’t hinder innovation in the mortgage-backed securities markets.