CRBRA contingent meets with Congressman Tonko
On October 18th, a diverse group of CRBRA members--representing association leadership, and local home building, construction, and mortgage interests--met with Congressman Paul D. Tonko (D-NY21) at his Albany office, to discuss their views on H.R. 1755, The Home Construction Lending Regulatory Improvement Act--which focuses on restrictions to acquisition, development, and construction (AD&C) loans to builders--and on H. Res. 25, about the continuation of the mortgage interest deduction.
Mike Curtis, a CRBRA director and Vice President of Sales at SEFCU Mortgage Services, compiled this summary explanation of the key issues of concern, especially as pertains to housing industry banking:
Risk Retention (Dodd-Frank)
Risk retention is intended to align the interests of borrowers, lenders, and investors in the long-term performance of loans. This "skin-in-the-game" requirement, however, is not a cost-free policy option. This requirement will increase the cost of loans funded through securitization, without doubt. Congress recognized this fact and asked that regulators define a "Qualified Residential Mortgage" (QRM), with loans fitting this description exempt from risk retention. FHA loans are exempt, as is any loan being sold to Fannie Mae & Freddie Mac while they're in conservertorship. All other loans will require a 20% downpayment (for purchases) or a minimum of 25% equity in the property (refinances). In addition to this, qualifying ratios cannot exceed 28/36 and there can have been zero delinquencies in the past two years. This appears to fly in the face of everything the administration is trying to accomplish to shrink Fannie & Freddie's role, and to stabalize the housing market. I might suggest the definition sound something like "fully documented and fully amortizing". This would remove the riskiest products from the mortgage market and at the same time allow for a robust private-label securitization market to return, thus shrinking Fannie & Freddie's very important role.
Mortgage Interest Deduction
I can't think of a larger tax increase on working families, many of whom relied on this savings when determining if they could afford the mortgage in the first place.
Loan Officer Licensing (SAFE Act)
State regulated lenders are required to have licensed Loan Officers. Federally regulated lenders are only required to have registered Loan Officers. Licensing requires 20 hours of education (plus 11 hours continuing education every year), fingerprints, background checks, personal credit checks, and passing a national exam as well as a state-specific exam. If a Loan Officer fails any of these requirements, including acceptable personal credit, their license will be denied and they must cease originating immediately. However, that same Loan Officer can go back to work for Bank of America the next day! Further, federal charters can recruit from us and have their Loan Officers begin immediately. We have to have someone complete everything mentioned above, submit to the NYS Banking Dept for approval, for which we've been told to expect 120-day turnaround before that Loan Officer begins with us.
Learn more:
Housing Finance Reform
Housing Production Credit Crisis
Tax Reform
The Mortgage Interest Deduction: Background & Statistics
H.R. 1755, the Home Construction Lending Regulatory Improvement Act
H.R. 1755 legislative alert
Author: CRBRA Admin | On: October 24, 2011 | In: Government Affairs · Politics · Members | No Comments
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