Small lenders balk at new role in mortgages

E. Scott Reckard | Los Angeles Times Comments Even as federal regulators recently cracked down on loose mortgage lending, they hoped that credit unions and community banks would serve as a haven for marginal borrowers. Such neighborhood institutions know their customers, the theory goes, so they could better judge the risk in lending outside new rules for what’s called a qualified mortgage. But smaller lenders are pushing back, saying they’ll scale back their mortgage business instead. They fear lending at the margins will make them targets for bank regulators and plaintiffs’ attorneys in cases of default. The new rules come from the Consumer Financial Protection Bureau, created in response...