Today we published an op-ed from the Community Home Lenders Association opposing the idea that federal Credit Reinvestment Act requirements should be applied to nonbanks, or IMBs, something that was recently supported by Federal Reserve Chairman Jerome Powell.
The CHLA argues that nonbanks should not be under CRA requirements because:
IMBs are already subject to fair housing requirements and supervision by every state they do business in.
Banks are subject to CRA because they have access to cheap federal funds, but IMBs don't have this advantage.
Without deposits coming from specific locations, it is unclear what local community an IMB should be reinvesting in.
IMBs follow underwriting standards of federal agency loans and state bond programs — both of which focus more on underserved borrowers.
Scott Olson, executive director of the CHLA, writes: "A federal CRA requirement on IMBs would merely impose unnecessary regulatory compliance costs and burdens on the strongest source of mortgage loans to minorities and underserved borrowers that we have today."
Under the last administration, the long-running dispute over the regulation of banks versus nonbanks — and whether one side has an unfair advantage — was somewhat muted. But in an environment where banks have a renewed interest in mortgage lending and regulators seem eager to flex their muscles, the stakes are clearly higher.
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April's existing home sales painted a picture of a market still grappling with low supply as sales dropped down 2.7% from March to 5.85 million, the NAR reported.
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