The CRA and nonbank lenders

There has been a lot of chatter in the mortgage industry around the Community Reinvestment Act and how it will impact nonbanks.

Good afternoon! Was this newsletter forwarded to you? Sign up here. Hey there, LOs!   There has been a lot of chatter in the mortgage industry around the Community Reinvestment Act and how it will impact nonbanks.   The CRA rule, enacted in 1978, mandates that banks must help meet the credit needs of communities in which they do business, including low- and moderate-income (LMI) neighborhoods.   This rule previously has only applied to depositories, but it sure appears that times are changing.   As HousingWire previously reported, New York state last week approved the extension of the state CRA to non-depository lenders. Other states, such as Massachusetts and Illinois, are moving to do the same.   The thought behind mandating nonbank lenders to follow the CRA rule on the surface seems reasonable, with nonbanks notably increasing their market share in mortgage lending in the past decade, and, thus, bearing more responsibility for the state of mortgage lending.   Nonbanks say they don't play by the same rules as depositories do, and thus, it makes no sense for them to be bound by CRA's mandate.   According to one mortgage executive interviewed by HousingWire, nonbanks have "historically done better in the affordable space than depositories."    And that's because "IMBs will take the time and work with clients and do a little bit more hand holding, whereas depositories don't.   "It's funny that they will try to force these CRA requirements, yet we don't get the protections such as MLS testing, or different insurance policies that [depositories] have," the source noted. "This is forcing IMBs to take on risk that they will have to privately cover, when we already do a great job of servicing the underserved community."   Meanwhile, the Community Home Lenders Association (CHLA) said that applying the CRA mandate is "unnecessary" and could discourage lenders from entering a state due to new regulatory burdens.   What do you think LOs? Will the CRA mandate have an impact on your shops? Is it a point of concern?   Let me know anonymously at mvolkova@housingwire.com   Maria Volkova Mortgage Reporter, HousingWire Fannie & Freddie made $5.3B from adverse market fee Politics & Money, Mortgage The money Fannie Mae and Freddie Mac earned from the adverse market fee paid for nearly the entire cost of the agencies' Covid relief options, according to a FHFA inspector general report. Calculate borrower income one time (1x)! SAre multiple departments calculating the same borrower income, using the same financials, and arriving at different results? Leverage multiple source-verified data with customizable rule sets and standardize income analysis from a national verification leader. Rushed for time? Watch a quick video. Sponsored by Service 1st Building the next generation of tech: Three ways to digitize home lending Presented by Mr. Cooper The home lending process is complex. To streamline efficiencies and eliminate errors, the industry needs technology. Rising home prices are fueling the private-label market Real Estate, Mortgage, HW+ Exclusive Content Although nonbanks to date have been the primary source of jumbo-loan originations for private-label deals, banks are sitting on a huge stockpile of jumbo loans now kept in portfolio.  Redfin's Glenn Kelman says they're not like Zillow Real Estate, Brokerage Redfin CEO Glenn Kelman doesn't believe that iBuying is going away, but he does believe that his brokerage needs to be smart in how it incorporates iBuying into the larger suite of real estate services the company offers. HousingWire, 433 East Las Colinas Blvd., Suite 830, Irving, TX 75039 Manage preferences

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