| Title: | MBA Issues Comments on Proposed HOEPA Rule |
| Source: | MBA |
| Date: | 4/8/2008 |
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WASHINGTON, D.C. (April 8, 2008) – The Mortgage Bankers Association today filed comments with the Federal Reserve in response to the Board’s proposed rule
to amend Regulation Z under the Truth in Lending Act (TILA) and the Home Ownership and Equity Protection Act (HOEPA). In
its comments, MBA commended the Board for its thoughtfulness and offered recommendations on how the proposed rule can be improved
to better protect consumers without causing decreased credit availability and increased consumer costs.
“We commend the Board for developing a comprehensive set of rules to address abuses in the mortgage market,” said Kieran P.
Quinn, CMB, Chairman of MBA. “We support many of the provisions in the proposed rule, but we do have concerns about the increased
regulatory burden, liability and reputational risks that lenders might face. If the rules are not revised, many borrowers
will pay more for their mortgage and fewer loans will be made to those borrowers most in need of credit.”
MBA’s greatest concern is that the Board’s definition of subprime loans is overly broad and could capture too many prime loans,
subjecting those products to overregulation and higher costs for borrowers. In addition, MBA is troubled by the extraordinary
new legal risk created by the Board’s decision to propose the rule under its unfair or deceptive practices authority. These
provisions include penalties that are disproportionate to the potential violations.
MBA’s letter contains recommended changes to improve the rule, including:
Strengthening safe harbors in consideration of ability to repay. The current rebuttable presumption is insufficient to protect lenders from unreasonable litigation risk.
Coordinating with HUD on disclosure of broker’s compensation. The Board’s current approach is incompatible with HUD’s proposed new RESPA rule.
Assuring a reasonable implementation period. The proposed changes require major operational, staffing and training challenges for lenders.
“The proposed rule shows an appreciation of the fact that ill-conceived restrictions can stifle innovation in the mortgage
market and can limit the availability of credit for all consumers,” said Quinn. “We hope that the Board will move quickly
to finalize these rules after addressing the concerns that we have raised on our members’ behalf.”
A complete copy of MBA’s comments can be found at www.mortgagebankers.org.
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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry
that employs more than 370,000 people in virtually every community in the country. Headquartered in Washington, D.C., the
association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand
homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and
fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety
of publications. Its membership of over 2,400 companies includes all elements of real estate finance: mortgage companies,
mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending
field. For additional information, visit MBA's Web site: www.mortgagebankers.org.