Ten trade groups, including the ABA, CUNA, and NAFCU, on Friday wrote to the Consumer Financial Protection Agency reiterating their position on the “qualified mortgage” -- or QM -- standard under the pending ability-to-repay rule. We “want to express our continued strong support for a QM that meets three critical requirements,” they said in a letter to CFPB Director Richard Cordray.
Those requirements are: the QM must be broadly defined to include the vast majority of very high quality loans originated in today’s market; its product, documentation and underwriting requirements must be based on objective, bright-line standards; and lenders and investors must be granted a clearly defined legal safe harbor from ability-to-repay litigation when they originate loans that meet the QM standards.
“We believe a broad definition of QM with bright-line standards embedded in a legal safe harbor is the only sure means to serve the widest array of qualified borrowers with affordable credit,” the trade groups said. “A legal safe harbor with such standards will reduce the uncertainty associated with QM litigation and ease the need for lenders and investors to establish conservative credit overlays.”
They added that such a safe harbor also will permit claims by borrowers when the standards have not been met. “In short, a safe harbor will result in far more mortgage borrowers obtaining sustainable credit than a QM rule with a rebuttable presumption,” the trade groups said.
Read the letter.
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