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CHLA Asks that the Federal Reserve Not Apply Expanded Federal Regulations to IMBs  

For Immediate Release
Media Contact: Scott Olson

In a letter to Vice Chair of Supervision Michael Barr and Board of Governors Member Michelle Bowman at the Federal Reserve, the Community Home Lenders of America (CHLA) asks that the Federal Reserve not expand regulatory authority to include small and mid-sized (non-bank) independent mortgage banks (IMBs).

CHLA included several reasons for this ask in their letter:

  1. Small and mid-sized IMBs pose no systematic risk to our financial markets
  2. Small and mid-sized IMBs pose little or no taxpayer risk, because of their primary business model of origination and sale or securitization of federal agency mortgage loans.
  3. Unlike most other non-bank financial activities, IMBs are already subject to significant and extensive federal rules governing mortgages under Dodd-Frank, such as QM.
  4. IMBs are already subject to extensive financial regulation by FHA, Ginnie Mae, Fannie Mae, Freddie Mac, and every state in which they originate or service mortgage loans.

“Adding a layer of financial regulation could unnecessarily raise costs, thus undermining the track of IMBs (particularly small and mid-sized IMBs) consistently leading the market in the origination of affordable mortgage loans to minorities and other underserved borrowers,”
writes CHLA.

CHLA’s IMB Report includes the credit record of small and mid-sized IMBs and an explanation of why their risk levels are very low and why they do not pose taxpayer or systemic risk.

Read the full letter here: