Many industry groups have commented this morning on the final Qualified
Mortgage/Ability to Repay rule issued today by the Consumer Financial
Protection Bureau (CFPB). Most of the
comments received so far have been generally favorable and have lauded CFPB and
the process they used in arriving at the rule.
Here is a sampling of the comments we have received.
Debra Still, Chairman, Mortgage
Bankers Association (MBA) said that MBA agrees that the goal of the
regulations, ensuring that borrowers receive loans they can repay, is in everyone's
best interests. Its concern has always
been that this goal be balanced with other housing policy objectives,
particularly ensuring the availability of mortgage credit to qualified borrowers.
While she cautioned that MBA needed
time to carefully examine the new rules, Still applauded CFPB for offering a
legal safe harbor to lenders when they originate loans under the qualified
mortgage standards. "This approach should allow lenders to offer sustainable
mortgage credit to a great number of qualified borrowers without having to risk
unreasonable and overly punitive litigation and penalties."
remains concerned that certain aspects of the rule could curb competition,
increase costs, and tighten credit availability for borrowers. Still referenced in particular the 3 percent
cap on points and fees as being "overly inclusive as it related to compensation
and affiliates. Loans with the same
interest rate, terms, and out of pocket costs should be treated the same under
the rule regardless of the organization structure or business model of the
lender." She also pointed to the 150
basis point above benchmark threshold for safe harbor provisions, questioning
whether it will impact the access of too many borrowers.
Fred Becker, President and CEO, National
Association of Federal Credit Unions (NAFCU) welcomed the inclusion of a safe
harbor for credit union loans that meet the rule's qualified mortgage
standard. "Credit unions have always
been responsible lenders seeking to meet their members' needs with safe and
sound products," he said. "NAFCU strongly believes that the safe harbor
approach is preferable for all parties involved in a mortgage loan transaction
as it provides parties clarity and certainty, and consequently discourages
frivolous lawsuits, claims or defenses."
But even with the safe harbor in place, Becker said NAFCU still has
concerns. "It has been our members' experience that a rigid approach to
regulation is counterproductive, often unworkable and frequently leads to
unwanted results," Becker said. "As the rule is likely to have greater
effect on smaller institutions, NAFCU will continue to pursue avenues and
solutions that will limit the rule's impact on credit unions, including seeking
an exemption for small, federally insured lenders."
The Center for Responsible Lending
(CRL) focused on the consumer protection aspects of the rule saying that its
broad definition of "Qualified Mortgage" means that significant protections affording
under the Dodd-Frank Wall Street Reform Act will extend to families "who in the
past too often were steered into abusive financial products."
"Ideally, the new rules would have
allowed any borrower with a qualified mortgage to challenge a lender who
failed to evaluate if the borrower could afford the loan," the CRL
press release said. However, they do
allow borrowers to hold lenders accountable on the riskiest types of mortgages,
those in the subprime market where the problems that led to the housing crisis
The advocacy group said that it will
closely monitor the resolution of how yield spread premiums will be counted
when it comes to defining a qualified mortgage.
"The CFPB should not create a loophole that allows high fee loans to
count as a qualified mortgage." If this issue
is appropriately resolved, the rules will be-all in all-good for consumers,
investors and the economy, CLR said. Applying these fair, understandable
standards to the mortgage market will foster a more competitive and robust
Rutenberg, Chairman of the National Association of Home Builders (NAHB), said
it is essential that the new rule strike the proper balance that encourages
lenders to appropriately provide credit to qualified borrowers while assuring
financial institutions they will be protected from lawsuits if they follow the
"Our initial review of the QM rule indicates that this balanced approach
can be achieved," he stated. NAHB is
encouraged that regulators heeded concerns from the housing industry to craft a
broad standard that includes many of today's sound mortgage products, including
fixed-rate and adjustable-rate mortgages, under the QM standard."
Noting that the rule does not take effect for a year he said, "It is
essential that regulators act prudently and thoughtfully in the coming year to
implement this rule in a sensible manner to avoid disruptions to the housing
finance system and ensure qualified borrowers can obtain affordable
The Independent Community Bankers of America (ICBA) said it was encouraged
that the final rule includes accommodations it had advocated for community
banks. ICBA President and CEO Camden R,
Fine commented, "Excessively rigid rules would threaten to force community
banks out of the mortgage market, making it harder for Main Street consumers to
get a home loan and slowing the nation's housing recovery. ICBA appreciates
CFPB's recognition of community banks as common-sense, relationship lenders
that help their communities thrive."
Provisions structuring the "qualified mortgage" standard as a legal safe
harbor and treating certain balloon-payment loans as qualified mortgages will
help Main Street lenders continue providing mortgage credit to meet the needs
of their customers and communities, he said.
The statements generally praised the manner
in which CFPB had taken their respective organizations concerns into account in
formulating the rule. Still said, "Director Cordray and the staff at the CFPB undertook a
deliberative and inclusive process to create this rule, and we commend their
approach and effort. Every step of the way, they took the time to listen
and understand the range of stakeholder concerns with this rule, which may be
the single most impactful rule that will affect mortgage lending in this
country coming out of the Dodd-Frank law."
The Coalition for Sensible Housing Policy commented on the matter as well.
“Now that federal regulators issued the Qualified Mortgage (QM) rule, it is important they complete the next step, which is to finalize the Qualified Residential Mortgage (QRM) rulemaking. Regulators were correct to reconsider their original QRM proposal, because imposing additional down payment requirements beyond those that have historically been required, such as a 20 or even a 10 percent down payment, would keep millions of credit-worthy borrowers out of the housing market, block private capital from competing throughout all segments of the market, prolong the housing crisis, and maintain the government’s overly large footprint on the housing market. Instead, regulators should preserve a role for prudently underwritten, privately-insured low down payment loans. As a diverse coalition of lenders, real estate professionals, and consumer and civil rights advocates, the Coalition for Sensible Housing Policy calls on regulators to propose a revised QRM definition that tracks the QM in order to ensure that all qualified borrowers have access to affordable and safe mortgage credit."