Banking Associations Strike Out at Proposed Laws on Home Loans

The Mortgage Bankers Association and America’s Community Bankers aren’t too keen on new proposed guidelines for non-traditional home loans.

In separate statements released Wednesday, the agencies warned that too many rules could prove harmful to innovation, according to a story by Reuters.

“The American consumer could suffer greatly from any guidance that imposes unduly restrictive standards on the use of these mortgage products,” America’s Community Bankers said in their letter dated March 27. Mortgage Bankers Association took a different tack, writing, “The private market can and does correct for excess risk more quickly than can a regulator who necessarily must move at a more deliberate pace.”

The worrisome guidelines in question, issued in December of 2005, were the result of concerns from the Office of the Comptroller of the Currency, the Federal Reserve, the Federal Deposit Insurance Corp., the Office of Thrift Supervision and the National Credit Union Administration and what they perceived to be consequences over growth in “exotic” loan products during the recent housing boom.

For this entire story, please visit US mortgage industry-Too many rules may be stifling.