CMLA Urges CFPB to Put Dodd-Frank Law Into Practice on Risk-Based Supervision of Community Lenders

Rob Zimmer Advocacy, Press Release

(Read as pdf)


Community lenders from across the country have written the Consumer Finance Protection Bureau (CFPB) urging that agency to put into practice a provision of law requiring risk-based supervision of independent mortgage bankers (IMBs).

 The CFPB has a statutory requirement—subsection 1024(b)(2) of Dodd-Frank—requiring it to exercise risk-based supervision of IMBs, taking into account a non-bank financial firm’s size, volume, product risk, and extent of state regulation.  Inexplicably, this law has never been put into effect by the agency.

 THE CMLA, joined by the Community Home Lenders of America, also believes that in order to fully comply with this requirement, the CFPB should adopt a formal policy or rule that exempts smaller IMBs from being subject to CFPB exams or audits, unless referred by an existing state or agency overseer.

 Ed Wallace, THE CMLA Executive Director, said: “We know that community lenders originating QM loans did not cause the last crisis and take good care of their customers.  We know that if the US has one-size-fits-all regulation, we will end up with only one size of lender—very, very large ones.  We know if this happens, consumers will lose.  This existing Dodd-Frank law recognizes this reality, reflects Congressional intent, and therefore we ask that Director Mulvaney put it into practice as soon as possible.”

Kim Curtis, CEO of Tidewater Home Funding (Chesapeake, VA) and incoming chair of the trade group, added: “Community lenders like mine already have a constant parade of agencies and states in our offices inspecting us continually.  We do plain vanilla lending and have excellent, long-term track records.  Frankly, we need to put more resources into making more loans for the families we serve so carefully.”

The letter, signed by over 50 community lenders and ancillary organizations supporting these lenders, is available here

THE CMLA and CHLA expect more community lenders will sign onto this recommendation as word spreads about this key, and so far unused, part of the original Dodd-Frank law.  The organizations commend the CFPB as it continues to supervise those large firms posing risks to consumers and the economy.

Rob ZimmerCMLA Urges CFPB to Put Dodd-Frank Law Into Practice on Risk-Based Supervision of Community Lenders