Many leaders of small community banks have told me that the compliance costs for originating smaller mortgages are prohibitive, and that the staffing and training required to meet the strict requirements are extraordinary in relation to the limited number of mortgages they originate.
As one state banking commissioner said to me recently, “It doesn’t make a lot of sense that you can make an $ truck loan on two sides of a sheet of paper, but that many, many pages of paperwork are required to make a $ loan on a mobile home or trailer."