WASHINGTON—Community bankers say excessive regulations are reducing the number of mortgage loans they are able to make.
In a survey released by the Independent Community Bankers of America (ICBA), three-quarters of community bank respondents said new mortgage regulations are keeping them from making more residential mortgage loans in their communities.
“ICBA’s 2014 Community Bank Lending Survey validates what community banks have long predicted—that new restrictions on mortgage lending are reducing much-needed access to mortgage credit for many Americans,” ICBA President and CEO Camden R. Fine said in a statement. “The results show that Congress should act quickly on ICBA’s Plan for Prosperity legislative platform, which would implement common-sense reforms to support continued access to credit without compromising consumer protection or safety and soundness.”
Among the findings in the survey:
- 73% of community bank respondents said regulatory burdens are preventing them from making more residential mortgage loans.
- Significant percentages of community banks are no longer active in the residential mortgage market, are considering an exit from this line of lending or are exiting the market.
- 78% of respondents reported increasing the number of staff members dedicated to lending compliance over the past five years.
- 44% said they originated fewer first-lien residential mortgage loans in 2014 compared with the year before.
- 66% of respondents said they do not provide loans that are outside the Consumer Financial Protection Bureau’s Qualified Mortgage definition or would only do so in special cases.
- 25% of community bankers said they are providing loans that do not fit the CFPB’s QM definition, showing that the new restrictions have shrunk the credit box and taken away lender discretion in granting credit, according to ICBA.
- Half of all rural banks said they do not qualify for the QM rule’s “rural” exception, which “demonstrates that exemptions from the standard are too narrow, limiting access to credit for consumers who need it,” the ICBA said.
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