A majority of vendors used by the mortgage industry have not indicated whether they are prepared for new mortgage rules. Community banks are most vulnerable.
A host of mortgage rules finalized this year by the Consumer Financial Protection Bureau become effective in January 2014.
Many mortgage lenders will be relying on third-party servicer providers to help them comply with the complex array of new mortgage rules.
In fact, a survey conducted in June by the American Bankers Association found that 79 percent of bank lenders will use vendors to create software and systems that will allow them to continue making home loans that are compliant with the rules.
But the survey, which was aimed at senior mortgage executives of ABA member banks, found that 60 percent of vendors had not told their banker clients when they will be ready to comply with the new rules.
In addition, 24 percent of those surveyed indicated help won’t be available until November or later.
“This survey confirms what we’ve been telling regulators and Congress all along: banks need more transition time to implement these mortgage rules,” ABA Executive Vice President of Mortgage Policy Robert Davis said in the announcement. “Community banks in particular have indicated that updated software, programming and training are big concerns, and training can’t occur until systems are operational.”
Davis warned that there is not enough time and said that a transition period is needed in order to avoid a reduction in available mortgages.
He added that without a transition period, the housing and economic recovery will be jeopardized.
