...with fewer home buyers in the market, competition among lenders appears to be intensifying, and, with some exceptions, that competition has extended to weaker underwriting standards. Frankly, that concerns me. We donÂt want to see the lending decisions bankers make today result in excessive forecloseds Â and reduced affordable housing credit Â tomorrow.
And on Tuesday speaking to American's Community Bankers Dugan further urged States to adopt the Fed's principles. His concern lay in the fact that many mortgage originators are outside of federal regulation, and thus it falls to state regulators to enact and enforce such standards.
I have been encouraged by the recent statements by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators. These two organizations are working on a version of the nontraditional mortgage guidance that will focus on mortgage underwriting and consumer protection issues. We understand that state agencies then will be urged to adopt and apply this guidance to the entities they regulate. In so doing, it is vital that key principles of our nontraditional mortgage guidance not be watered down. ...
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