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ICBA will actively engage the Federal Housing Finance Administration (FHFA) and the GSEs regarding overly burdensome policies and practices that increase costs and operational burdens for community banks to access the GSEs, which reduces liquidity in rural or small-town communities.
ICBA’s principles include:
Underwriting and Appraisal Guidelines. The GSE underwriting and appraisal guidelines, originally designed for suburban or urban communities, often make it difficult to qualify creditworthy borrowers in small-town or rural communities. In such communities, borrowers frequently have multiple sources of income such as seasonal, self-employed, or W2 wages, all of which are critical in qualifying the borrower for the loan. ICBA will continue to work with the GSEs and FHFA to develop alternatives to their processes and requirements to make it easier and more cost effective to use the GSEs.
Servicing. Community bank mortgage loan servicing is based on close ties to customers and communities. The cost to service a mortgage has doubled since the financial crisis, forcing many community banks to exit the mortgage servicing business. The GSEs must structure their servicing guidelines to avoid this outcome.