Jim Nussle, CEO and president of the Credit Union National Association, recently wrote a letter to Congressman Andy Barr, R-Ky., thanking him for introducing the Portfolio Lending and Mortgage Access Act, which would deem residential mortgages held in portfolio by the original creditor as a ‘qualified mortgage.’
In the letter, Nussle argues that because many credit unions are primary portfolio lenders, the mortgages they hold should be deemed qualified mortgages under the Consumer Financial Protection Bureau's qualified mortgage rules.
As such, passage of the act would allow ongoing availability of mortgage credit to over 100 million credit union members. Not to mention, lenders would continue to retain all the risk.
‘Treating loans that financial institutions hold on their balance sheets in this manner is appropriate because the lender retains all of the risk involved with these mortgages and is subject to significant safety and soundness supervision from its prudential regulator,’ Nussle writes. ‘This will help credit unions, many of which are primarily portfolio lenders, continue to provide mortgage credit to their members.’
The measure also has the support of the American Bankers Association (ABA). In a recent statement, Frank Keating, president and CEO of the ABA, says passage of the act would ‘help expand access to mortgage credit by treating loans originated by a bank and held in portfolio as qualified mortgages.’
‘This proposal, which received bipartisan support in the last Congress, is a major component of ABA's Agenda for America's Hometown Banks,’ Keating says. ‘It's clear that new regulatory requirements have restrained mortgage lending and have made it particularly difficult for some creditworthy borrowers to obtain a home loan. This proposal is a common-sense approach that will help borrowers gain access to some of the lowest-risk mortgage products offered by banks.’
As Keating points out, ‘Banks hold only the safest loans in portfolio.’
‘There is no need to impose additional hurdles on banks or borrowers if the loan is held in portfolio,’ he says. ‘We stand ready to work with members of the House as they move forward with this important effort.’
The measure is likely just the first of a series of proposals to ‘dial back’ some of the more onerous rules imposed on lenders as a result of the Dodd-Frank Act in the new Republican-controlled Congress.