Bank Risk-Based Capital Issues
MBA continues to advocate on behalf of our members that Federal Banking Agencies (the “Agencies”) modify their FFIEC Call Report Supplemental Instruction to provide for a reduced risk-weighting for all warehouse loans to non-depository institutions. The current risk weighting is 100%, which does not match the 50% risk weighting that is assigned to mortgage loans made directly by the warehouse lender to borrowers. Bank warehouse lending operations support more than 50% of the single-family mortgage origination, representing an important and growing share of the market over the past decade. MBA strongly believes that reducing this risk weighting to 50% would increase the capacity of warehouse lenders to fund more loans, thereby providing much-needed support to the real estate finance market and ensure the continued flow of mortgage credit for home purchases and refinances. In general, the underlying loans that serve as collateral for these warehouse loans are generally pooled as Ginnie Mae, Fannie Mae, or Freddie Mac mortgage-backed securities (MBS’), and therefore, there seems to be no justification for assigning a higher risk weighting to the warehouse loans (used to fund mortgage lending) than mortgage loans made directly by the bank. There is no evidence that a non-bank mortgage origination is twice as risky as a bank origination, and therefore, no reason for the differential in risk weighting. Thus, MBA continues to recommend a 50% risk weighting for warehouse loans, thereby conforming the risk weighting of warehouse loans to that of mortgage loans made directly by banks.
Recent MBA Activity Related to Federal Banking Regulations
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MBA Letter to CFPB on RFI: Assist the Taskforce on Federal Consumer Financial Law
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Joint Letter to FCC on TCPA
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MBA Letter to FCC on Implementation of TRACED Act-Knowledge of Customers by Entities with Access to Numbering Resources
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MBA Letter to OCC and FDIC on Joint Notice of Proposed Rulemaking on CRA Regulations
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MBA Letter to the Federal Banking Agencies on Support Bank Efforts to Help Real Estate Finance Activities Through Reduced Risk Weighting on Warehouse Loans
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MBA Letter to SEC and FINRA on Mortgage Industry Concerns Regarding Broker-Dealer Margin Calls on TBA Hedge Positions
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MBA Letter to OMB on RFI on Improving and/or Reforming Regulatory Enforcement and Adjudication
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Joint Letter to FCC on TCPA
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MBA Letter to HUD on White House Council on Eliminating Regulatory Barriers to Affordable Housing
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Joint Letter to the Federal Banking Agencies on QRM Review - Credit Risk Retention
Related MBA Events
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Read MBA's Summary of the Basel III Bank Capital Proposal
This MBA summary outlines the Banking Agencies’ Proposed Changes to Bank Capital Requirements for banks with assets of $100 billion or more. Learn more.