Pub. 5 2016 Issue 4

l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s 20 B ANKERS ARE A RESILIENT BUNCH. I KNOW this from the years I have spent working for what I consider to be the most important industry on the planet during what was the most challenging time for banking in a generation. And I know it from the conversations I have been having on the road these past few months, hearing bankers express both frustration with current banking policy but also resolve to do what it takes to serve their customers. In fact, these twin sentiments are documented in the results of ABA’s latest real estate lending survey. The survey of 159 banks, 68% with less than $1 billion in assets, turned up seemingly contradictory findings. It found, for instance, that 72% think the ability-to-repay/Qualified Mortgage rule will continue to restrict credit availability and 75% say regulation is having a negative impact on their business. But it also found that more banks — 74% last year, compared to 67% in 2014 — are willing to extend some non-QM loans, even if on a highly targeted basis. It also found that banks made the highest percentage of loans to first-time homebuyers — 15% — in the survey’s 23-year history. These latter findings are far from a vindication of Washington’s approach to mortgage rulemaking. Instead, they should be seen as a testament to banks’ resiliency and customer focus. Few would call the current mortgage lending environment particularly appealing. Between the dramatic increase in prescriptive mortgage regulations and the persistent low interest rate environment, there’s not much to recommend the line of business. But customers still want to buy homes. And bankers know better than anyone that communities need vested homeowners to truly thrive. That’s why bankers are finding a way to deliver what customers want and need, Washington be damned. While this is a positive, it shouldn’t let policymakers off the hook. Yes, there are banks that are making loans happen. But there are still 26% that are too concerned with liability to make a non-QM loan. And more than a third in the survey report that they have lost customers due to the increased time and paperwork it takes to approve a loan. Where did these customers go — to a less-regulated lender? Increased costs to the banks are a given. More than eight out of ten bankers said their compliance costs have climbed thanks to increased personnel, added technology costs and a loss of efficiency. Ninety-two percent cite increased time allocation. Of course, members of Congress don’t care what regulation costs banks. But they do care what it costs their customers. So let me suggest that every time you lose a customer due to regulatory rules — whether because they couldn’t stand the hassles and dropped out of the process, or because their debt- to-income ratio didn’t make the QM cut — drop a line to your elected representatives. Tell them one less loan was made today because Washington has tied your hands. Let lawmakers experience the same steady drip of frustration that you have experienced these last few years as one Dodd- Frank rule after another has made an obstacle course of mortgage lending. Your stories can help persuade Congress to take action — giving lawmakers the chance to demonstrate that they are as committed to their constituents and communities as banks are theirs. E-mail Rob Nichols at nichols@aba.com . WASHINGTON UPDATE: PUTTING CUSTOMERS IN HOMES DESPITE WASHINGTON By Rob Nichols, President and CEO, American Bankers Association