A balancing act--consumer protection and broad access to credit.

Author:Still, Debra W.

THE CONSUMER FINANCIAL PROTECTION BUREAU (CFPB) has now been in operation for two years. As anticipated, 2013 marked the final publication of many key Dodd-Frank Wall Street Reform and Consumer Protection Act rules.

Having the rules in place has eased uncertainty to some degree, but a bit more certainty does not resolve today's overly tight credit conditions.

We all agree that credit is already tight and credit-score requirements remain well above normal. While the housing market is improving, access to credit is clearly not universal today, with the higher end of the market growing while the lower end is actually shrinking.

Data shows that first-time and low-to-moderate-income borrowers are primarily limited to Federal Housing Administration (FHA) financing. This burden falls most heavily on America's minorities and others who have historically struggled to gain access to credit.

And 3,500 pages of Dodd-Frank rules--issued all at once--have introduced extraordinary levels of complexity that could make lenders even more cautious than they already are. Add to this other rules still pending and the day-to-day changes issued by the Federal Housing Finance Agency (FHFA), Fannie Mae, Freddie Mac, the Department of Housing and Urban Development (HUD), FHA, the Department of Veterans Affairs (VA), U.S. Department of Agriculture (USDA), all 50 states and other federal regulators, and it is abundantly clear Dodd-Frank is driving a marked shift in real estate finance--a shift from regulatory uncertainty to regulatory complexity.

Given this prospect, our biggest concern must be the effect on the availability of credit to qualified consumers. In that context, lenders, consumer advocates, regulators and policymakers must work together to ensure that these complex new rules do not make credit even tighter for qualified consumers, especially low-to-moderate-income and first-time homebuyers.


We must continue working collaboratively with the CFPB, other federal regulators and legislators to make certain the rules are done "right" and that they support responsible access to credit. The industry applauds the CFPB for using a deliberative and inclusive approach in making many of its rules, but we remain concerned that certain aspects of the rules will be prohibitive to otherwise qualified consumers.

These rules must be aligned, with each other and with existing federal regulations, as well as those of other government agencies and state...

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