Small Mortgage Lenders Seek Relief from Regulations

Small mortgage lenders petitioned the Consumer Financial Protection Bureau on Tuesday to weaken excessive regulations in their industry. Represented by two leading industry groups, the Community Home Lenders Association and the Community Mortgage Lenders of America, the lenders collectively expressed their desire to see more tiered regulations that strengthened or weakened regulatory enforcement depending on the size of the lending organization.

The joint letter, which was delivered to CFPB director Mulvaney, called for the agency to “carry out streamlined supervision of smaller independent
mortgage bankers (IMBs), through risk-based supervision, as is required by statute under Dodd-Frank.” The reasoning behind this request, according to the groups, is that small lenders may be forced to shut down due to the excessive costs of compliance. Larger institutions, however, would be able to amortize and absolve these high regulatory costs, leading to a concentration of lending services in big institutions.

While small community lenders realize that the CFPB doesn’t have the power to change regulations themselves, shifting their risk-based supervision practices to balance the playing field can have a large impact. To promote further change, the lenders are also putting their support behind the provisions laid out in a bill going through congress known as the “Community Mortgage Lender Regulatory Act
of 2017.” The bill would establish regulatory exemptions for IMBs that are similar to the ones granted currently for smaller banks and depository institutions.

Cyberlink supports the effort of small lenders to reduce their regulatory burden so that they can serve the needs of their borrowers while still being successful in the industry. Small lenders serve a vital need throughout the country by providing loans for individuals and families under-served by big banks and lending institutions.

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