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CHLA Releases Regulatory Comparison of Non-Bank Mortgage Lenders and Banks

CHLA Releases Regulatory Comparison of

Non-Bank Mortgage Lenders and Banks

Rebuts Claims by Some that Non-Bank Lenders Are Not Adequately Regulated

Contact:  Scott Olson                                                                                  For Immediate Release
(571) 527-2601                                                                          Wednesday, September 2, 2015
The Community Home Lenders Association (CHLA) today released a side-by-side chart (enclosed) comparing consumer and financial regulation of non-bank mortgage lenders and banks.  CHLA is the only national association exclusively representing non-bank mortgage lenders, and has consistently warned that non-bank over-regulation can lead to industry concentration, which hurts consumers and actually increases financial risk.
“The Community Home Lenders Association is releasing a detailed side-by-side comparison to show that non-bank mortgage lenders are subject to more consumer protections than banks and have virtually identical financial and operational regulation by product regulators, including FHA, RHS, VA, Ginnie Mae and FHFA,“ said Scott Olson, CHLA Executive Director.”   “We are releasing this comparison to dispel myths and misperceptions held by some in the press and some in Congress that non-bank mortgage lenders are not adequately regulated.”
The comparison takes place as non-bank lenders have significantly increased their share of mortgage lending in the last few years, while many banks have exited or reduced the mortgage market.  The comparison highlights a number of important points regarding regulation of non-bank mortgage lenders, including:
* Individual non-bank mortgage originators are subject to stringent SAFE Act testing, continuing education, and independent background checks – all of which bank loan originators are exempt from.
* Non-bank mortgage lenders are subject to CFPB exams – while 99% of banks are exempt from them.
* The great majority of non-bank mortgage lending is currently in government loans (FHA, GNMA, and GSE) – which are subject to strong net worth and operational requirements governing both mortgage loan origination and servicing – and which apply virtually identically to non-banks and banks.
* Non-bank mortgage lenders are subject to state net worth and liquidity standards and exams in every state they do business in; unlike banks, the deposits of non-bank mortgage lenders are not guaranteed by the FDIC and federal taxpayers, and they don’t engage in other risky product lines.
“Going back to last year’s FHFA IG Report, we have heard concerns raised about the adequacy of non-bank mortgage lender regulation,” said Scott Olson, CHLA Executive Director.  “These concerns are rebutted by the reality of stronger non-bank SAFE Act regulation, broader CFPB oversight, vigorous product regulation of FHA, GNMA, and GSE loans, and supervision by every state that non-bank lenders do business in.”
The comparison focuses on non-bank mortgage lenders that originate and service loans, and is not intended to address risks and regulation of large non-bank specialty mortgage servicers, that have come under scrutiny.