By Rod Alba
The American Bankers Association continues its advocacy efforts on multiple issues that affect mortgage lending. Here is a rundown of important recent news and activities:
Trigger leads bill signed into law
President Trump recently signed into law an ABA-backed bill prohibiting credit reporting firms from selling mortgage applicant information to lenders who bombard them with unwanted solicitations. Under the new law, contact information will only be sold to third parties under limited circumstances. The bill’s passage is a result of persistent advocacy by the American Bankers Association and others, reflecting the industry’s unified stance on protecting consumers and fair competition.
Effect on banks: This legislation is an important victory for banks and their mortgage customers. This new law addresses circumstances where credit bureaus sell a consumer’s contact information immediately after a mortgage inquiry, resulting in significant unsolicited offers from competing lenders. This loophole not only overwhelms customers, but it undermines the relationship banks build with customers and results in confusion and mistrust. Banks often hear from customers who are overwhelmed by dozens or even hundreds of calls, texts and emails after applying for a mortgage. The bill shields consumers from intrusive and misleading solicitations, improving their overall experience with the bank.
ABA attends Treasury meeting to discuss GSE reforms
ABA attended a Department of Treasury roundtable on Sept. 8, along with a wide range of industry and financial trade groups. The purpose of the meeting was to discuss the future of Fannie Mae and Freddie Mac and the federal government’s role in mortgage finance going forward. Most conversations were introductory and focused on initiating discussions towards defining the role and appropriate market activities of the enterprises, defining appropriate levels of regulation, and identifying the need for legislative involvement in the planned conservatorship release of the GSEs. In the meeting, ABA advanced its longstanding Principles for Housing Reform, stressing that policymakers ensure that the GSEs stay within their defined mission and footprint while highlighting the importance of Federal Home Loan Banks to depository institutions, especially community banks.
Importance to banks: This set of Department of Treasury meetings were intended to initiate conversations with outside stakeholders, and as such, revealed no government position or commitment regarding a preferred path toward reforms. These meetings signal increasing momentum for federal reforms of the GSEs and an increasing focus on ending conservatorship status while moving toward privatization. We expect that the Treasury Department and the Federal Housing Finance Agency will hold further roundtables with industry groups and market participants over the coming weeks. ABA will remain engaged in this process and ensure banks are fully represented in the critical discussions concerning housing reform.
ABA backs rescinding 2023 CRA rule, making process improvements
The Federal Reserve, FDIC and the Office of the Comptroller of the Currency in July issued a joint proposal to rescind the 2023 CRA rule. In a letter to the agencies, ABA said that while it agreed the CRA rule needed to be updated to reflect changes in consumer behavior and technology, the 2023 regulatory change were not consistent with the CRA statute. ABA expressed support for rescinding the 2023 Community Reinvestment Act final rule and reinstating the 1995 rule.
Effect on banks: ABA has consistently advocated that CRA reforms are necessary to modernize the regulations to reflect changes in banking, improve transparency and ensure consistent application by regulators. ABA supports the original goals of the CRA but the regulatory framework needs updating to achieve more certainty and less ambiguity in CRA requirements. ABA has called for greater transparency in the examination process and a database of CRA-qualifying activities to make compliance more predictable for banks. On multiple occasions, ABA has said that overly complex or flawed reform rules risk discouraging banks from offering certain products or lending in areas outside of their traditional branch networks. The association argues that the goal of reform should be to clarify, not complicate, the regulatory framework to better incentivize investment in underserved communities.
Bankers respond to fintech firm’s call for government price fixing
In August, the Financial Technology Association, a trade association for data aggregators and fintech companies, teamed up with crypto and mega retailers in a letter to President Trump urging the administration to undermine free markets and engage in government price fixing. This constitutes further instances of data aggregators and middlemen trying to garner support for policies that support their profit and ability to get a “free ride” off the major investments banks have made in protecting consumers’ data.
ABA, along with industry allies, stand solid in their advocacy of a personal financial data rights rule that comports with the statute, protects consumers and ensures a level playing field to encourage innovation, a process the CFPB has already begun. In the communication, ABA makes clear that the fintech letter is an attempt by aggregators to mislead the administration into supporting harmful policies that lack any meaningful benefit for consumers.
Related items: ABA op-ed on consumer-permissioned data sharing, new ABA Foundation guide for nonprofits
ABA’s Ryan Miller had the pen on an American Banker op-ed published recently taking aim at data aggregators efforts to effectively have banks subsidize their business, and highlighting a new opportunity to get consumer-permissioned data sharing right as the CFPB reconsiders its approach to the Section 1033 rulemaking.
The ABA Foundation this week released a new resource for nonprofit organizations on how to establish and maintain bank partnerships that can lift up the communities they serve. The guide is free and available to all nonprofits.
Effect on banks: Community engagement is an important aspect of banking and has particular importance in the residential lending world. Through trust and collaboration, banks can gain insights into local needs and opportunities while communities benefit from tailored financial services and investments that foster resilience and prosperity. The ABA Foundation guide encourages nonprofits to be intentional and strategic in establishing relationships with banks.
Rod Alba is ABA’s SVP of real estate finance.
