ACB: Press Releases

Contact:	Robert Schmermund (202) 857-3104 Jim Eberle (202) 857-3145	Jim Eberle (202) 857-3145 (work) (703) 893-2593 (home) [email protected]	For Immediate Release March 28, 2006 #06-14
E-mail: [email protected]

ACB URGES REGULATORS TO REVISE GUIDANCE ON ALTERNATIVE MORTGAGES

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WASHINGTON, D.C. ─ America’s Community Bankers has urged the federal banking regulators to substantially revise, if not withdraw, joint guidance on alternative mortgage products.

“We agree that institutions must use care and prudent practices to originate alternative mortgage products and to manage portfolios containing these products,” ACB said in its comment letter, “but we do not believe it is necessary to issue guidance to depository institutions to reiterate these points.”

If the agencies decide to finalize guidance, ACB said several revisions are needed to avoid excessive regulatory burdens and restrictions. Such restrictions could result in supervised bank lenders being less willing to offer alternative mortgages.

“When underwritten appropriately, alternative mortgages do not pose undue risks, either singly or in combination,” ACB said, noting that community mortgage lenders have offered, and consumers have chosen, alternative mortgage products for years.

“ACB believes that restrictive standards on the use of these mortgage products are unnecessary for regulated financial institutions.”

ACB said it supports appropriate disclosure to potential borrowers about alternative mortgage terms, but the proposed guidance extends into requiring lenders to determine the “suitability” of mortgage products for the individual consumer. “We do not believe it is appropriate or possible for the lender to dictate the best mortgage products for individual consumers.

Click here to read the comment letter.

America’s Community Bankers is the national trade association committed to shaping the future of banking by being the innovative industry leader strengthening the competitive position of community banks. To learn more about ACB, visit www.AmericasCommunityBankers.com.

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