The dreaded Consumer Financial Protection Board (CFPB) has already hired 12,500 litigators to help carry out its mandate to regulate to mortgage industry, according to Michael Young, chairman-elect of the national Mortgage Bankers Association (MBA).
Young spoke Thursday morning at an event sponsored by the Connecticut Mortgage Bankers Association (CMBA) at the New Britain Museum of American Art. He outlined the four main priorities of the national organization: Tackling Dodd-Frank, particularly the qualified residential mortgage (QRM) definition; government-sponsored entity (GSE) reform; and the threat to the mortgage interest tax deduction and the Federal Housing Authority (FHA).
Asked by CMBA President Jeff Lipes if the organization had any response planned for the potential onslaught of regulation that so many litigators could unleash, Young said the MBA was "trying to slow it down," and the group would do everything it could to support members facing litigation. He added that "it’s very difficult given that we all know that there are a number of legitimate charges that have been made," which will have to go through the courts.
He said given the CFPB’s mandate to enforce fairness in lending, and the current absence of clear definitions of what "fairness" means when it comes to lending standards, such issues were likely to be hashed out in the courts.
He was more confident on the potential for GSE reform and the QRM definition, saying that bringing aboard Dave Stevens, former head of the Federal Housing Administration, had really helped the group to navigate the negotiations, which require "almost a day-by-day, week-by-week response team."
"It’s been very helpful to have Dave included in those discussions," Young said.
On GSE reform, Young cautioned that the current government role in mortgage lending was unhealthy and unsustainable, and that mortgage bankers need to be prepared for a reduction in federally-backed lending. But he said the MBA is confident that a white paper it released last year describing a possible successor system to Fannie Mae and Freddie Mac "will form the basis" of the changes to come, although it was difficult to say how long reforms would take.
The MBA is hoping to play a similarly influential role in the QRM debate, after successfully extending the comment period on the proposal, he said. The group is "running numbers like crazy," to come up with a model that will illustrate the impact of the proposal on lending.
"That is the top priority in the organization right now, to get the numbers in place so that we become the real source of the debate in terms of the impact," Young said.
He also expressed hope that given the administration’s emphasis on job creation, some of the current mania for regulations may be self correcting. "Government itself is being frustrated by regulations now," said Young.
