Secretary of the U.S. Department of Housing and Urban Development (HUD) Ben Carson said in a speech on Monday that he promises to help big banks get more comfortable about financing lower-income borrowers, without fear of being penalized from mortgage lending errors, according to an article by Bloomberg.
“Innocent errors should not create chaos and fear and make people less likely to get involved in the first place,” Secretary Carson said in a speech at a MBA conference in Denver, Colorado.
Secretary Carson’s focus on lending practices comes from HUD’s Federal Housing Administration (FHA) and Justice Department having to shell out billions of dollars in fines and legal settlements resulting from the financial crisis.
DS News previously reported that the big banks may have become far less competitive in the overall mortgage market, with some of the largest banks, including JPMorgan Chase & Co. and Bank of America, pulling back on lending through government programs to stay clear from getting sued by the federal government.
In addition, while these big banks also continue to bear the brunt of mistakes in underwriting and, as a result, protect themselves by charging slightly more for home loans to avoid risky lending—they are leaving lower-income borrowers with higher costs and fewer financing options.
According to Bloomberg, Secretary Carson’s comments come as the Trump Administration “attempt to curb rules and regulations they see as constraining businesses.”
Meanwhile, the U.S. Treasury Department released its first report recommendation for the banking industry in June 2017 and has been releasing a series of regulatory recommendations since—but the banking sector could be expecting more changes soon with Secretary Carson’s focus on the matter.
In the end, the article reports that ultimately Secretary Carson's goal is the FHA and Justice Department working to revise the rules so lenders can practice without fear of being overly punished for inconsequential errors.
View the full Bloomberg article by clicking here.