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Residential Department: Q&A: Glen S. Corso, Community Mortgage Lenders of America: March 2017

 

Q&A: Glen S. Corso, Community Mortgage Lenders of America

Community lenders are feeling the squeeze from regulations

Small and mid-sized community mortgage lenders have been impacted more by the rising costs of loan origination over the past few years than large national lenders, which can spread the cost of compliance across a larger pool of loans. These rising costs threaten to squeeze some of these lenders out of the market, which could have a big impact on small communities across the country.

The Community Mortgage Lenders of America (CMLA) is an advocacy group that represents small and mid-sized lenders in front of Congress and key regulators in Washington, D.C. We spoke with Glen S. Corso, executive director of CMLA, about the major issues facing the trade association’s constituents.

What concerns community mortgage lenders the most right now?

I’d say the biggest one right now is regulatory reform. We’re looking to see if we can provide equal treatment to lenders as far as audits and examinations by the CFPB [Consumer Financial Protection Bureau]. We’d like to see for mid-sized and small lenders that have a good track record that they would only have to deal with their state regulators and not have to face a CFPB audit unless the state regulator refers some matter to the bureau. The second big issue is GSE [government-sponsored enterprises] reform.

What is the CMLA’s position on GSE reform?

What our members would like to see happen with the GSEs is for them to be recapitalized, reformed, and then released. With the reform, ideally what they would like is to see the GSEs become regulated just like utilities are regulated. That is all their fees and charges would have to be approved by a regulator, which obviously could be the FHFA [Federal Housing Finance Agency], and they would follow a very safe path rather than indulging in risky types of operations or ventures.

What regulations are you concentrating your efforts on currently?

The biggest thing is probably the increase in data that is going to be collected under the Home Mortgage Disclosure Act (HMDA). One big concern about that [is] the pretty steep increase in the amount of data that is going to be collected. And two, a very uncomfortable feeling by the lenders that this is extremely sensitive consumer information that is going to be turned over to a federal agency with no real assurances yet about how the federal agency is going to be safeguarding that data.

Lenders are the ones that have a business relationship with the consumer, and the consumers understand that they have to turn over sensitive personal financial information to be considered for and ultimately granted a loan, and the lenders take that responsibility quite seriously. The last thing in the world they want is to be viewed as somehow breaching that trust that the consumer places in them.

How can small lenders squeezed by rising costs compete with larger lenders?

We’ve initiated a dialog with the CFPB — specifically, in fact, with Director [Richard] Cordray — and talked to him about this issue. He challenged us to come back to him … with data showing [how much] the cost of regulation is squeezing [small and mid-sized lenders]. So, we’ve compiled that data, and we’re going back to have a meeting with Director Cordray in the second half of February where we’re going to set this data in front of him and hopefully continue a dialog to discuss the ways the bureau can work with us to start to reduce the costs of compliance on mid-sized and small lenders.

Does the rise in online lending concern community lenders?

Yes and no. Obviously that is a new, developing factor in the whole competitive landscape, but the lenders in our group, for the most part, offer very personalized service and deal with a fair amount of first-time buyers and folks who are not terribly familiar with the process. It’s always good to introduce them to the process with more face-to-face interaction rather than doing it through an online method. Now, are consumers going to shop for mortgages that way and are consumers going to use the internet to back check what they are being told by the lender? Lenders fully expect that to happen.

We have started to disseminate information to our lenders about electronic mortgages, and we think that once that gets more widespread adoption in the industry, it potentially could be a good way to level the playing field.

Glen S. Corso is executive director of the Community Mortgage Lenders of America (CMLA), a trade association based in Washington, DC. Prior to joining the CMLA, Corso was executive vice president and general counsel for National Mortgage Insurance, a mortgage insurance company headquartered in Emeryville, California. Corso has more than 40 years of experience in the mortgage industry and has held senior executive positions with mortgage insurance and mortgage banking companies.


 

Will McDermott is managing editor for Ask a Lender. Reach him at willm@scotsmanguide.com or (800) 297-6061.

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