Richard Cordray, director of the Consumer Financial Protection Bureau, tried to calm community bankers' fears on Wednesday by telling them not to be concerned over the new mortgage rules issued by the agency. The CFPB's new mortgage rules will take effect next year.
"I know that complying with our new regulations is a worry for many of you," said Cordray, at the Independent Community Bankers of American Conference in Las Vegas. "Community banks that lend responsibly have no reason to fear the Ability-to-Repay rule."
Corday highlighted the fact that the rule includes several exceptions for smaller lenders. This includes an exemption for smaller banks with less than $2 billion of assets as long as they consider debt-to-income ratios when making a loan. In order to qualify, those banks must also make less than 500 first-lien mortgages through affiliates.
"How those proposals will affect thousands of community banks across the country remains to be seen. But Cordray believes the exemptions, along with the existing tight lending market, will prompt business for small bankers," writes American Banker's Rachel Witkowski and Jackie Stewart.
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