Legislative Proposals for a More Efficient Federal Regulatory Regime

Posted On December 12, 2017

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Since the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), mortgage lenders and other financial institutions have faced increased precautionary regulation.  Almost a decade after the Financial Crisis, and many of these regulations remain intact without any adjustment or review, despite economic recovery.  Last week, CMG Financial President and CEO Christopher M. George testified on behalf of the Mortgage Bankers Association before the US House Committee on Financial Services Subcommittee on Financial Institutions and Consumer Credit in support of the Mortgage Fairness Act of 2017 and the Comprehensive Regulatory Review Act of 2017.

Leveling the Playing Field for Wholesale and Retail

The Mortgage Fairness Act of 2017 (H.R. 2570) addresses and improves upon the issue of “double-counting” fees paid by a wholesale lender to a mortgage broker.  The Ability to Repay (ATR) rule and Qualified Mortgage (QM) standard count fees paid by a wholesale lender to a mortgage broker in the calculation of points and fees to qualify the loan for QM safe harbor.  However, these fees are already reflected in the interest rate offered to the consumer, thus the fees are “double-counted” causing loans originated through mortgage brokers, especially small-balance loans, to exceed the maximum allowable points and fees under the ATR rule and QM standard.

In his testimony, Chris George stated, “As the ATR rule and QM standard have been implemented, MBA has consistently maintained the view that mortgages originated with the same interest rate and other product features should be treated equally from a regulatory perspective regardless of the originator’s business model. H.R. 2570 aims to improve a provision of the ATR rule and QM standard that generates unequal treatment of loans originated by mortgage brokers.”

Regulations on Small Lenders & Brokers

The Comprehensive Growth of Regulatory Review Act of 2017 (CRRA) aims to increase the frequency of regulatory review, currently established by the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA).  As per the current legislation, the Federal Financial Institutions Examination Council (FFIEC), Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, and Federal Deposit Insurance Corporation must conduct a total regulatory review at least once every ten years, to adjust or eliminate outdated regulation.  The CRRA, instead, proposes more frequent regulatory review to expand the breadth of reviews and incorporate additional regulators.

Chris George also expressed support for the CRRA.  From his testimony, “the MBA also supports the CRRA which amends the EGRPRA.  This legislation will clarify the EGRPRA review process and will eliminate ambiguity to ensure the FFIEC undertakes the timely review and elimination of any unnecessary regulations.”

Speeding Up Regulation Review Time


Both H.R. 2570 and CRRA would enable regulators to regulate more effectively in areas of importance and improve the efficiency of mortgage market regulations.  Chairman of the Subcommittee on Financial Institutions and Consumer Credit Representative Blaine Luetkemeyer opened the dialogue with the sentiment, “It is possible to have a regulatory regime that protects the American people and financial system without curtailing customer choice,” and these proposed bills aim to achieve that goal. 


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