Washington, D.C. – The Consumer Financial Protection Bureau (CFPB) announced several proposed changes to its mortgage rules that would expand access to home loans for many underserved buyers living in rural areas and small towns in New Mexico and across the country. In response to the announcement, U.S. Rep. Steve Pearce (N.M.-02) issued the following statement.
“The CFPB’s actions last week to alter its mortgage rules are a welcome step in balancing consumer protection and over-regulation.
“Since they were introduced in 2013, I have been pressing CFPB to amend these rules to ensure small and rural banks can continue to serve their communities. The process was long and, I am sure CFPB DirectorCordray would agree with me, frustrating at times, but needed. The proposed changes have the ability to immediately benefit the lives of consumers in rural and small communities.” Pearce said.
“These rules were designed to target the heart of the 2008 mortgage problem -- unsustainable mortgage loans -- but inadvertently handicapped millions of Americans in rural and underserved areas simply trying to take the next step in the American Dream, purchasing a home.
“We should create a marketplace that does not allow for deceptive practices, like those that led to the 2008 financial market fallout, but we must not over-regulate consumer services, such as mortgages, out of the market. Before this overhaul – that is exactly what the rules were doing in small and rural communities.”
Pearce continued: “Currently, community institutions are forced to offer the same cookie cutter mortgage, regardless of the person, unless they can provide the loan without going to a secondary lender for its full lifecycle. Unfortunately, in small communities throughout New Mexico and across the country, banks do not have the finances to do this. The result has been fewer loans and less access for homebuyers. In New Mexico, the current mortgage rules have caused 25% of banks to drop mortgage service,” Pearce added.
If finalized, the proposed new CFPB rules would make it easier for community lenders with assets below $2 billion to qualify as small creditors. “Small creditors” are exempt from many of the ability-to-repay requirements under the 2010 consumer law also known as “Dodd-Frank.”
Congressman Pearce is a member of the House Committee on Financial Services and Vice Chair of the House Subcommittee on Financial Institutions and Consumer Credit.