MBA urges rollback of mortgage rules as rates stay high

"Clearly, there are plenty of good ways to roll back red tape and make mortgages more affordable while still protecting borrowers, Broeksmit said. The White House has said that it wants to help community banks and smaller institutions. But they aren't the only lenders who need relief from red tape. So do credit unions, IMBs, large banks, and many others."

"On homebuyer demographics, Broeksmit pushed back on headlines suggesting the median age of first-time homebuyers has risen to 40. He said MBA research still puts the figure between 32 and 34 years oldbasically unchanged for more than a decade. Even so, affordability remains a major hurdle. With mortgage rates expected to remain elevated, Broeksmit said other reforms become even more important to improving access to homeownership."

"He also noted that MBA has recently increased its focus on the non-agency market, including forming a non-agency forum and convening a peer roundtable for companies active in non-agency and non-QM lendingan area he said is drawing greater regulatory attention. Basel III bank capital requirements, Broeksmit said the current proposal is far superior to the prior version. He said a 250% risk weight on mortgage servicing rights (MSRs) is excessive, with MBA advocating for a return to the current 100% level."

"He also said the association is pushing for better treatment of warehouse lending. Under the current system, warehouse lines carried a 100% risk weight, but that defies logic, Broeksmit said. If an IMB fails to repay, a bank gets the whole loan, but at only a 50% risk weight. Are you kidding me? The risk weights shouldn't improve when a counterparty fails! Broeksmit added that the MBA is strongly calling on agencies to change the capital requirements for banks that hold portfolio loans backed by private mortgage insurance."

Regulatory burdens can be reduced to make mortgages more affordable while still protecting borrowers across community banks, smaller institutions, credit unions, IMBs, and large banks. Claims that the median age of first-time homebuyers has risen to 40 were rejected, with research placing it between 32 and 34 years old for more than a decade. Affordability remains difficult as mortgage rates stay elevated, so additional reforms are needed. Greater attention is being directed to the non-agency market, including non-agency and non-QM lending. Basel III capital requirements are viewed as improved, but mortgage servicing rights risk weights are considered excessive and warehouse lending treatment is criticized as illogical. Changes are also sought for portfolio loans backed by private mortgage insurance under agency rules.

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