Stricter mortgage servicing rules that are likely to be imposed on community banks are seen as a threat to consumers’ mortgage options by the Independent Community Bankers of America (ICBA). According to the Community, the tighter rules that federal banking regulators are considering might result in community banks leaving the mortgage servicing field. This would harm the diversity of choice, as well as the quality of services for consumers.
According to the ICBA, community banks should be exempted from the Basel III capital standards that impose stricter rules on mortgage-servicing rights. If community banks are driven out of the field, mortgage servicing will be done only by larger nonbanks. These are seen as not fully capable to meet the needs of local communities, as they focus on larger scale operations with less interest in providing quality customer service.