News Column

The Independent Community Bankers of America Issues Letter to Regulators Regarding Support for H.R. 4042 and H.R. 5148

July 28, 2014



WASHINGTON, July 28 -- The Independent Community Bankers of America issued the following letter to Congress:

The Honorable Jeb Hensarling

Chairman

Committee on Financial Services

U.S. House of Representatives

Washington, D.C. 20515

The Honorable Maxine Waters

Ranking Member

Committee on Financial Services

U.S. House of Representatives

Washington, D.C. 20515

Dear Chairman Hensarling and Ranking Member Waters:

On behalf of the more than 6,500 community banks represented by ICBA, I write to thank you for scheduling a markup of a number of important regulatory relief measures on July 29. ICBA strongly supports two bills in particular, H.R. 4042 and H.R. 5148, which would promote community bank mortgage servicing and lending. We encourage all committee members to vote YES on H.R. 4042 and H.R. 5148, which are described below.

The ''Community Bank Mortgage Servicing Asset Capital Requirements Study Act of 2014" (H.R. 4042), sponsored by Rep. Blaine Luetkemeyer, would delay the effective date of the Basel III rule with respect to MSAs for nonsystemic banking institutions and require the banking agencies to conduct a joint study of the appropriate capital treatment of MSAs. Left unaddressed, the punitive new MSA capital provisions of Basel III will shift servicing to non-bank servicers which are not subject to prudential regulation - a risk highlighted by both the Financial Stability Oversight Council and Comptroller Thomas Curry.

The "Access to Affordable Mortgages Act" (H.R. 5148), also sponsored by Rep. Luetkemeyer, would provide an exemption from independent appraisal requirements for any mortgage with a value of $250,000 or less held in portfolio for a period of at least three years, regardless of its interest rate or its "qualified mortgage" status. When a lender holds a loan in portfolio, it bears the full risk of default and has every incentive to ensure that the loan is appropriately underwritten and collateralized. In many instances, the community bank does not charge the borrower for an in-house appraisal performed by bank staff. The end result is a higher quality appraisal at no cost to the borrower. We are very pleased that H.R. 5148 reflects a provision found in ICBA's Plan for Prosperity.

ICBA was grateful for the opportunity to testify in support of these bills on July 15. Taken together, H.R. 4042 and H.R. 5148 will promote community bank servicing, increase the flow of mortgage credit for moderate income borrowers, and strengthen the housing recovery in rural and small town markets.

Thank you again for bringing these bills before the committee.

Sincerely,

/s/

Camden R. Fine

President & CEO

CC: Members of the House Financial Services Committee

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