The growing list of of new requirements generated by the Dodd-Frank Wall Street Reform and Consumer Protection Act on banks has some smaller institutions wondering if it is worth the effort to continue offering mortgage loans.

In an article in USA Today, Alesia Harlan, a compliance officer with a small Iowa bank discussed a file for a mortgage loan that contained nearly 300 pages of documents.  She pointed out that the number of disclosures, notices and statements have merely added to the confusion for consumers.

The report suggests the the Dodd-Frank act will result in as much as 5,000 pages of new rules from regulators and required new rules are released.  The amount of expense and effort that will be required to keep up with the on-going flood of regulation may force some banks to cease making mortgage loans altogether.

This heightens a trend that has been that has been developing over the past 25 years.  In 1984, the report states citing FDIC data, banks with more than $10 billion in assets controlled only 28 % of the industry and small banks with less than a billion controlled 40%.  Today, those shares have shifted to 79% for large banks and 11% for small banks.

With the costs of compliance skyrocketing, experts indicate that the result of this legislation with lead to further consolidation and smaller entities merge into larger organizations who have the resources to manage compliance requirements.

The concerns cited by small banks resemble those stated by MetLife with the company announced plans sell their banking division, stating the regulatory requirements were placing undue pressure on their ability to compete in their other business units, especially their primary insurance businesses.