Community Mortgage Lenders of America Warns: Congress Will "Pull the Plug" on Main Street Lenders.WASHINGTON -- The Community Mortgage Lenders of America (CML 1. CML - A query language. ["Towards a Knowledge Description Language", A. Borgida et al, in On Knowledge Base Management Systems, J. Mylopoulos et al eds, Springer 1986]. 2. CML - Concurrent ML. America) today released a letter (see the attached) to congressional leaders warning that proposals under consideration by Congress will have a devastating dev·as·tate tr.v. dev·as·tat·ed, dev·as·tat·ing, dev·as·tates 1. To lay waste; destroy. 2. To overwhelm; confound; stun: was devastated by the rude remark. effect on mortgage lending and increase risk in the mortgage system. "If enacted, the proposals in Congress to impose new capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. on main street mortgage lenders effectively spells the end of the community mortgage banker Mortgage Banker A company, individual or institution that originates, sells and services mortgage loans. Notes: Don't confuse a mortgage banker with a mortgage broker. , resulting in less competition and fewer choices for borrowers," said Scott Stern, chairman of CML America. "Under these proposals the mortgage system will become riskier and the local mortgage banker will be extinct. Congress will literally destroy hundreds of thousands of lives if this proposal is approved. We urge Congress to reconsider re·con·sid·er v. re·con·sid·ered, re·con·sid·er·ing, re·con·sid·ers v.tr. 1. To consider again, especially with intent to alter or modify a previous decision. 2. this ill-advised provision." The letter was signed by 87 community mortgage lenders from CML America and the Community Mortgage Banking Project. The lenders provide home mortgage loans in 30 states, representing over $120 billion in annual mortgage originations. About CML America CML America represents the nation's Main Street mortgage lenders. CML America is founded on the principal that a thriving independent mortgage banking sector increases competition in the industry and provides borrowers with more choice, lower costs, and innovative products. For more information, visit www.cmlamerica.com. About the Community Mortgage Banking Project Community Mortgage Banking Project is a public policy organization representing the interests of independent mortgage bankers. For decades, the community-based mortgage banker has delivered value and choice to consumers by leveraging local market expertise, quality service, and lower costs for borrowers. The CMBP supports financial market reforms that promote consumer access, borrower and investor transparency, local competition and choice, and a value added Value Added The enhancement a company gives its product or service before offering the product to customers. Notes: This can either increase the products price or value. mortgage chain. For more, visit www.communitymortgagebankingproject.com.
November 23, 2009 <
<
The Honorable Christopher J. Dodd <
The Honorable Richard C. Shelby
Chairman <
Ranking Member
Senate Banking Committee <
Senate Banking Committee
534 Dirksen Senate Office Building <
534 Dirksen Senate Office Building
Washington, DC 20510 <
Washington, DC 20510
RE: Risk Retention Provisions in Restoring American Financial Stability Act Dear Chairman Dodd and Ranking Member In United States politics, the ranking member or ranking minority member is a member of a congressional committee from the minority party, frequently the member with the highest seniority. Shelby: Community mortgage bankers are traditional, community-based lenders that have remained focused throughout the housing bubble and in its aftermath on their core business - originating FHA See Federal Housing Administration. FHA See Federal Housing Administration (FHA). , VA and GSE-eligible home mortgages. We are very concerned about the risk retention requirements proposed in the Restoring American Financial Stability Act. We firmly believe that the language, which establishes an across-the-board credit risk retention requirement, will sharply increase borrowing costs, dramatically restrict the availability of affordable mortgage options, and cut short efforts to stabilize stabilize See peg. the fragile housing market. Our housing finance system relies heavily on the securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. process to deliver several hundred billion dollars in mortgage credit to borrowers each year. As the Committee seeks to mitigate mit·i·gate v. To moderate in force or intensity. mit  i·ga tion n. excessive risk
taking in the securitization process, it is critically important that
you preserve the full benefits of securitization in the core of the
market for lower risk products. The most effective way to accomplish
this is by creating a clear, statutory exemption from the risk retention
requirements for stable, affordable, well-underwritten and well-designed
products.
Under the risk retention requirements in the draft bill, independent mortgage bankers - which accounted for almost one-third of all home mortgages in 2008 - would be forced out of business. Community banks and credit unions would shortly face liquidity and balance sheet constraints that will limit their lending capabilities. Together, these locally-based companies are critical to our nation's mortgage supply chain but simply are not structured to hold on balance sheet the cumulative layers of credit risk over multiple origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real cycles required under the bill. A poorly designed risk retention standard could eliminate local market competitors and accelerate the consolidation of the market into the hands of a few major lenders. This is an ironic result in a bill that is trying to mitigate systemic risk Systemic Risk Risk common to a particular sector or country. Often refers to a risk resulting from a particular "system" that is in place, such as the regulator framework for monitoring of financial_institutions. and too-big-to-fail concerns. There are many good mortgage products that have been originated and securitized securitized Of, related to, or being debt securities that are secured with assets. For example, mortgage purchase bonds are secured by mortgages that have been purchased with the bond issue's proceeds. for decades without encouraging undue risk-taking. The undersigned un·der·signed adj. 1. Having signatures or a signature at the bottom or end. Used of documents. 2. Signed or having signed at the bottom or end of a document: companies urge the committee to create a securitization framework that establishes a statutory exemption for low risk "qualified mortgages" with strong underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. and documentation standards and safe product designs. For products that don't meet these standards, regulators should have the authority to require a range of risk retention on creditors or issuers based on the risks of the products involved. We appreciate your consideration of our concerns and look forward to working with you on these important matters. If you need additional information on this issue, please contact Glen Corso of the Community Mortgage Banking Project at 571-357-1034, and Scott Stern of the Community Mortgage Lenders of America at 314-506-0079. Henger Rast Mortgage Corporation < Birmingham, AL MortgageAmerica, Inc < Birmingham, AL Walker Jackson Mortgage Corp. < Birmingham, AL The Carroll Mortgage Group, Inc. < Little Rock, AR imortgage.com, Inc. < Scottsdale, AZ American Capital Corporation < El Segundo, CA Mountain West Financial, Inc. < Redlands, CA Sierra Pacific Mortgage < Folsom, CA South Pacific Financial < Rancho Cucamonga, CA America's Mortgage < Wheat Ridge, CO Cherry Creek Mortgage Company < Greenwood Village, CO Clarion Mortgage Capital, Inc. < Greenwood Village, CO First National Bank Mortgage < Fort Collins, CO Ideal Home Loans, LLC < Englewood, CO Pinnacle Mortgage Group < Lakewood, CO Unifirst Mortgage < Grand Junction, CO Universal Lending Corp. < Denver Bank of Idaho < Pocatello, ID Chicago Bancorp < Chicago First Centennial Mortgage Corp. < Aurora, IL Platinum Home Mortgage Corp. < Rolling Meadows, IL The First Mortgage Corporation < Flossmoor, IL Lake Mortgage Company, Inc. < Merrillville, IN Advance Mortgage Corporation < Overland Park, KS FirsTrust Mortgage, Inc. < Leawood, KS Century Lending Company < Louisville, KY Mortgage Banking Group < Louisville, KY Eustis Mortgage Corp < New Orleans Stoneham Bank < Stoneham, MA Union Trust Mortgage Corporation < Peabody, MA William Raveis Mortgage < Westford, MA AmeraMortgage < Milford, MI AmeriFirst Home Mortgage < Portage, MI Birmingham Bancorp < West Bloomfield, MI Michigan Mutual Inc. < Port Huron, MI Quicken Loans < Livonia, MI Ross Mortgage < Royal Oak, MI Shore Mortgage < Birmingham, MI Towne Mortgage Company < Troy, MI Mortgages Unlimited, Inc. < Maple Grove, MN Summit Mortgage Corp. < Plymouth, MN Gershman Mortgage < St. Louis North American Savings Bank < Kansas City, MO Paramount Mortgage < St. Louis VA Mortgage Center < Columbia, MO First Interstate Bank < Billings, MT American Security Mortgage Co. < Charlotte, NC Coastal Mortgage Services < Charlotte, NC Cunningham and Co. < Greensboro, NC Dover Mortgage < Charlotte, NC Residential Mortgage Corp. < Fayetteville, NC Southern Community Bank & Trust < Winston-Salem, NC Advisors Mortgage Group, LLC < Wall, NJ Ark Mortgage < North Brunswick, NJ Aurora Financial Group, Inc. < Marlton, NJ Maverick Funding Corp. < Parsippany, NJ NJ Lenders < Little Falls, NJ Superior Mortgage Corp. < Hammonton, NJ Weichert Financial Services < Morris Plains, NJ Los Alamos National Bank < Santa Fe Fairmont Funding < New York Guaranteed Home Mortgage Co. < West Harrison, NY Premium Capital Funding, LLC < Jericho, NY CMCO Mortgage, LLC < Lorain, Ohio Equity Resources, Inc. < Newark, Ohio Hanna Howard Mortgage Services < Cleveland, Ohio Union National Mortgage Co. < Strongsville, Ohio First Mortgage Co., LLC < Oklahoma City, OK Wealthbridge Mortgage < Beaverton, OR Cardinal Financial Company < Warminster, PA Franklin American Mortgage Co. < Franklin, TN Mortgage Investors Group < Knoxville, TN American Home Key, Inc. < Dallas Cornerstone Mortgage Company < Houston Envoy Mortgage < Houston Extraco Banks < Temple, Texas Intrust Mortgage < Ft. Worth, Texas Mission Mortgage < Austin, Texas Republic State Mortgage Company < Houston American Lending Network, Inc. < Orem, Utah Atlantic Bay Mortgage < Virginia Beach, VA Benchmark Mortgage < Richmond, VA Tidewater Home Funding < Chesapeake, VA Windermere Mortgage Services < Seattle, WA Fairway Independent Mortgage Corp. < Madison, WI GSF Mortgage < Brookfield, WI USA Funding Corp. < Brookfield, WI |
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