Access the Government-Sponsored Secondary Mortgage Market
ICBA will actively engage the Federal Housing Finance Administration (FHFA) and the GSEs regarding overly burdensome policies and practices that increase costs and operational burdens for community banks to access the GSEs, which reduces liquidity in rural or small-town communities.
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Position & Background
- ICBA will actively engage the Federal Housing Finance Administration (FHFA) and the GSEs regarding overly burdensome policies and practices that increase costs and operational burdens for community banks to access the GSEs.
- ICBA’s principles include:
Underwriting and property appraisal guidelines and policies should not discriminate against properties and borrowers.
Appraisal requirements need to be flexible to accommodate the unique nature of rural and small-town properties and should not exacerbate the current shortage of appraisers in these markets or drive higher costs for residential appraisals.
Servicing: Community bank mortgage loan servicing is based on close ties to customers and communities. The cost to service a mortgage has doubled since the financial crisis, forcing many community banks to exit the mortgage servicing business. The GSEs must structure their servicing guidelines to avoid this outcome. Further ICBA supports raising the small servicer threshold to 30,000 loans which would help reduce costs for mortgage servicing.
Overly complex quality control/loan manufacturing policies and requirements add considerable costs to the process, making it harder for smaller lenders to sell directly to the GSEs.
- The GSEs should not set inflexible minimum loan delivery and servicing requirements that result in community bank lenders losing their approved seller-servicer designation if they do not sell or service a pre-determined number of loans to the Enterprises each year.
Underwriting and Appraisal Guidelines
The GSE underwriting and appraisal guidelines, originally designed for suburban or urban communities, often make it difficult to qualify creditworthy borrowers in small-town or rural communities. In such communities, borrowers frequently have multiple sources of income such as seasonal, self-employed, or W2 wages, all of which are critical in qualifying the borrower for the loan. ICBA will continue to work with the GSEs and FHFA to develop alternatives to their processes and requirements to make it easier and more cost effective to use the GSEs.
Servicing
Community bank mortgage loan servicing is based on close ties to customers and communities. The cost to service a mortgage has doubled since the financial crisis, forcing many community banks to exit the mortgage servicing business. The GSEs must structure their servicing guidelines to avoid this outcome.
Letters & Testimonies
Letter to Senate on Changes to Section 705 of the ROAD to Housing Act
ICBA Experts on the Mortgage Market
