Banking Regulations Keeping Community Lenders From Local Investment

KANSAS CITY, MO – Despite a robust job market that “translates into higher incomes, greater confidence, and more people looking to buy a new home”, community banks are not sharing in the positive growth outlook. Speaking to attendees at a mortgage industry event, Federal Reserve Governor Michelle Bowman expressed optimism about the trajectory of the housing market but raised concerns about the declining number of community banks remaining in the consumer real estate mortgage market. “As regulatory burdens have risen, many community banks have significantly scaled back their lending or exited the mortgage market altogether,” Bowman said. “Home mortgage lending has traditionally been a significant business for smaller banks, and the decline in this business threatens a part of the banking industry that plays a crucial role in communities.” According to the American Bankers Association, while the housing market rebounded slowly after the financial crisis, the national indicators suggest a positive growth outlook for the housing sector over the next several quarters.