By KIMBERLEY HAAS
The president and CEO of the Mortgage Bankers Association said they are pushing for clarity and common sense as he criticized policymakers this week during his remarks at the Secondary and Capital Markets Conference and Expo in New York City.
Bob Broeksmit said policymakers plan to pile on more enforcement and red tape at a time when MBA member businesses are struggling.
“There seems to be a sense, at the highest levels of government, that the mortgage industry needs to be reined in,” Broeksmit said, according to his prepared remarks.
Broeksmit referred to the recent failures of Silicon Valley Bank, Signature Bank, and First Republic Bank saying some policymakers are now pushing for new rules that could cause damage to the industry.
Broeksmit said Rohit Chopra, director of the Consumer Financial Protection Bureau, has suggested he may unilaterally push for prudential standards for non-banks, including independent mortgage bankers and mortgage servicers.
“At the same time, the CFPB and the Financial Stability Oversight Council are now seeking comments on subjecting nonbank financial companies to Federal Reserve supervision,” Broeksmit said. “Where to start? How about the fact that non-banks played no role in the current banking crisis. There’s also the fact the CFPB’s legal authority in this space is profoundly unclear and utterly untested.”
Broeksmit said there is no proof that non-bank financial companies such as IMB servicers pose a systematic risk to the economy.
“To be blunt, this looks like a power grab. And not only that, it looks like a clear-cut attempt to punish an industry that some policymakers seem to personally dislike or distrust,” Broeksmit said.
Broeksmit said the MBA is also fighting efforts to make lenders liable for the actions of independent appraisers. Officials at the CFPB and the U.S. Department of Justice are advancing this idea in response to incidents of bias in the appraisal process, he said.
“Lenders are legally prohibited from interfering with appraisers. You don’t control how they work, what they do, or which numbers they come up with. As such, it is patently absurd to hold you liable for their actions,” Broeksmit said.
Broeksmit said they have had some recent wins.
Earlier this month, officials at the Federal Housing Finance Agency rescinded a rule changing upfront fees based on borrowers’ debt-to-income ratios. If it had gone through, the policy would have created an adjustment for DTIs higher than 40% that Fannie Mae and Freddie Mac would acquire.
“It would have been an operational nightmare, raising costs at the worst possible time,” Broeksmit said. “Fortunately, FHFA heard our feedback.”
The Mortgage Bankers Association is located in Washington, DC. This week’s conference in New York City is the largest gathering of secondary and capital markets professionals in real estate finance, according to the MBA website.