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All of the new proposals appear to be good and are what small banks have been doing for years. My small bank has over half of their loans in home mortgages and have not forclosed on one in over 10 years. Rules like this one could make it harder on small banks to work with customers and more expensive to make mortgage loans.
A college professor of mine many, many years ago always said think of the word “KISS” – Keep It Simple Stupid”. In my 30 years of banking and the last 16 as CEO of this small bank, I have never seen a simple regulation. Even the ones that solve a simple problem have complex rules. The more complex, the more expensive and the more non-compliance. I like the suggestions mentioned because we do these things anyway. It is in our best interest. I am not sure of the answer, but I know I will have to comply with all the rules, I just should not have to pay someone to explain the rules to me.
I run a very small bank and we keep every loan we make. All banks must provide you with a form that tells if they plan on selling your loan. If you don’t want your loan sold and would like to have a relationship with a loan officer, they I would like to suggest using a small bank. It accually works. I have been dealing with the same customers for 30 years and have serviced all of their loan needs for that long. Remember, rate is not everything. You get what you pay for, just know what your getting before you sign.
All banks are required to give you a simple form when you apply for the loan. It states that the bank will sell your loan, the bank will service your loan and does not intend to sell your loan, or the bank can sell your loan. If you don’t want your loan sold, tell them. If they will not change, go somewhere else. You did have a say when you signed that form.
Number 1. The regulation should only apply to banks that sell loans and only on the loans that are sold. 2. Almost all new regulations require training for all employees, which is expensive and unnecessary. The regulation should always be simple enough that all bankers and consumers can understand it without having to pay someone to understand it. 3. All regulations now have a requirement that the regulation has to be audited at least on an annual basis and the findings reported to the board, even if the bank does not have anything to audit or report. 99% of all banks want to comply with all laws and regulations. It is either the expense involved or the misunderstanding of the reg. that causes them not to be in compliance. I am required to have three exteral audits done at my bank… more »
Hi mpick76, and welcome to Regulation Room. Rules like this one are made by trying to minimize costs and maximize benefits. Could you provide more details about the costs of the new rules to your business, and how you might make them better?
We did that with our last home. Our loan was eventually sold to Countrywide. We had no say in the matter.
Hi mpick76. The CFPB is trying to ensure that borrowers whose loans are sold get the information they need when their loan is transferred. You mentioned in an earlier post that rules like this one could make it more expensive for small banks to make mortgage loans. The CFPB is interested in hearing from people with expertise like yourself about the costs of the new rules to small banks, so that it can adopt a rule that minimizes those costs. Any insights you can share would be helpful.
Thank you, mpick76, for sharing these suggestions about how to minimize costs to small banks. Do other commenters have anything to add?