U.S. mortgage credit probably will get tighter as federal regulators continue working on new rules to govern housing finance, Mortgage Bankers Association President and Chief Executive Officer David Stevens said today.
Rules created by the 2010 Dodd-Frank Act, including measures to prevent mortgage abuses, are just starting to take effect and lenders are awaiting still more before the end of the year, Stevens said in an interview at a Bloomberg Government breakfast in Washington.
“I actually think credit is going to get tighter before it gets easier,” said Stevens, 56.
The comments by Stevens, who was Federal Housing Administration commissioner before joining the industry group in 2011, come after President Barack Obama and Federal Reserve Chairman Ben S. Bernanke expressed concern that credit is being denied to qualified borrowers, hampering the economic recovery.
The Consumer Financial Protection Bureau issued a regulation in January defining abusive mortgages and requiring banks to determine borrowers’ ability to repay their loans. Still to come is a rule mandating that banks must keep a stake in any mortgages defined as risky.
The Mortgage Bankers Association and other housing industry groups have been pushing for regulators to align the rules so lenders don’t face overlapping requirements.
“It’s just literally hitting the entire marketplace now,” Stevens said. “The cumulative impact of correcting against an era of really bad mistakes that were made in the marketplace is being felt by the entire housing-finance-related infrastructure right now.”