ICBA survey: New mortgage regulations hurting the housing business

icba survey resultsby Dan Rafter

Are new mortgage regulations slowing the growth of the residential real estate industry? The leaders of the country’s community banks think so.

This is important news, not just for the residential real estate business but for anyone who makes a living in commercial real estate, too. The economy in the United States soars when the country’s home-buying and -selling business is doing well. But if fewer people are able to qualify for mortgage loans, and, of course, buy homes, that negatively impacts the economy.

And that is not good for professionals who want to see more office buildings, grocery stores and warehouse buildings built.

A new survey from the Independent Community Bankers of America found that about 75 percent of community bank respondents said that new mortgage regulations are preventing them from making more residential mortgage loans in their communities.

“New restrictions on mortgage lending are reducing much-needed access to mortgage credit for many Americans,” said Camden Fine, president and chief executive officer of the bankers association.

The survey found that many community banks are considering an exit from the mortgage market because they are so concerned with the new rules, while 78 percent said that they have had to hire more staffers who are solely dedicated to making sure that their banks are following the new mortgage rules.

A total of 44 percent of respondents said that their banks had originated fewer first-lien residential mortgage loans in 2014 than they did in 2013. (Although market conditions might have played a role in this.)

The new rules that have caused this anxiety? They are the Qualified Mortgage rules imposed last year by the federal government’s Consumer Financial Protection Bureau. These rules state that mortgage loans must meet certain standards to be considered qualified. One of the most important standards? Borrowers’ total monthly debts — including their new mortgage payment — must not equal more than 43 percent of their gross monthly incomes.

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