Private Money Lenders and Small Lenders Fight Unfair Compliance

[Corey Dutton]

The Consumer Financial Protection Bureau (CFPB) was another offspring from the Dodd Frank Act, a legislation that is well-hated among mortgage professionals in America. These new controls under the CFPB have put unnecessary regulations on small community lenders and other private money, non-bank lenders. In Utah for example, private money lenders lending their own money on residential investment real estate, are now required to be licensed under the SAFE Act. The SAFE Act, another evil stepchild of Dodd Frank, has it’s own set of regulations enforced on the State level.

From a recent article published in Mortgage Professional’s America, counter legislation is being proposed by the Community Mortgage Lenders of America (CMLA). This proposed legislation will serve to shield community lenders with good track records from the “excessive” standards of large banks.

Mark MacDougald, Chair for the CFPB, said this proposed legislation aims to assist small lenders, and not large banks, with the burdens of new compliance.
MacDougald was quoted in the MPA Article,

"While we all agree that consumers deserve protection from abusive products and practices, we remain deeply concerned that a 'one size fits all' approach will significantly disadvantage small, community-based lenders that did not create the meltdown, and don't have the resources to hire an additional staff to comply with rules aimed at larger institutions…"

What is your opinion on this topic? Should the small, community lenders be forced to comply with the same standards as the large banks? Here’s a link to the entire article on MPA, very interesting read: http://www.mpamag.com/mortgage-originator/small-lenders-take-aim-at-unfair-compliance-15323.aspx

Please share your comments on this topic below.