A coalition of 33 housing and financial services trade associations have written to Richard Cordray, the director of the Consumer Financial Protection Bureau (CFPB), to establish a broad qualified mortgage (QM) definition and clear QM standards as part of the forthcoming ability-to-repay regulations the agency is likely to publish later this year.
‘We believe that is the only way to help the economy and at the same time ensure that the largest number of credit-worthy borrowers are able to access safe, quality loan products for all housing types, as Congress intended in enacting the Dodd- Frank Act,’ the trade groups wrote. ‘Every version of the ability to repay provisions introduced in Congress – including the final version of Dodd-Frank that became law – paired the ability to repay Requirement with the QM. The reasoning was that pairing the prospect of liability with an exception for well underwritten, safer, more sustainable loans was the best means of ensuring sound lending for borrowers. To add incentives for QM lending, the law also added liability for steering consumers from QM to non-QM loans.
‘Further,’ the trade groups added, ‘the bureau was given broad flexibility to define the QM in a manner that will "ensure that responsible, affordable mortgage credit remains available to consumers. All of these provisions demonstrate Congress' intent that all creditworthy borrowers – especially low- and moderate-income borrowers and families of color – should be extended the important protections of a QM.’
The organizations that signed the letter included the American Bankers Association, the American Securitization Forum, the Community Mortgage Banking Project, the Community Mortgage Lenders of America, the Independent Community Bankers of America, the Mortgage Bankers Association, the National Association of Realtors and the National Community Reinvestment Coalition.