MBA Chairman: It’s time for the penalty phase to end

by 21 Oct 2014
Mortgage Bankers Association Chairman Bill Cosgrove and President David Stevens publicly challenged federal regulators Monday to put an end to the “relentless cycle of penalties” and the “uncertain, confusing and intimidating regulatory and enforcement environment.”

During the opening session of the 101st Annual MBA Convention & Expo in Las Vegas, Cosgrove and Stevens said the regulatory environment is hindering the housing recovery because potential homebuyers have little to no access to credit.

“As an industry, we’ve proven we need to be regulated. However, the regulatory avalanche of today’s Washington isn’t working and we are seeing the results in today’s marketplace,” said Cosgrove. “We all need to come back to center, policy makers, regulators, consumer groups and our industry to achieve a healthy balance that the American economy desperately needs.”

MBA figures show that credit availability is running at roughly one quarter of a more typical year, such as 2004.  The FHA typically allows credit scores as low as 580, but many lenders have decided lending below 640 is too risky, according to Stevens.

In August 2013, President Obama said in a speech in Arizona, “Now that we’ve made it harder for reckless buyers to buy homes they can’t afford, let’s make it a little bit easier for qualified buyers to buy the homes that they can afford.” 

Stevens said that although the president was right, the administration still needs to back up its words with more actions.

“Regulation-induced credit overlays are making credit harder to get for the very borrowers the rules were intended to protect,” said Stevens. “As a result, we’re seeing a clear opportunity gap.  Mortgage credit is most available to those who need it least.”

Addressing the Consumer Financial Protection Bureau's approach, Stevens said, "Enforcement should be the exception to the rule, not the rule itself."