A coalition of trade associations representing the financial services industry and housing industry has sent a comment letter to Richard Cordray, director of the Consumer Financial Protection Bureau (CFPB), that calls for the structuring of qualified mortgage (QM) standards as a legal safe harbor.
During the summer, the CFPB is expected to issue a proposed rule defining a QM. The Dodd-Frank Act defined a QM under "ability to repay" standards that says the mortgage cannot have points and fees that are more than 3% of the loan amount. However, the trade groups argue that the 3% limit would restrict the availability of affordable mortgage credit.
‘Our purpose is to reiterate our very strongly held view that the QM should be structured as a legal safe harbor with clear, well-defined standards,’ the trade groups wrote. ‘The standards must embody requirements for safe mortgages for consumers and specify the grounds on which there can be litigation or enforcement action as to whether those requirements have been met.
‘Structuring the QM as a safe harbor and focusing litigation and enforcement activity on whether the standards are met is the only means of ensuring that the largest number of borrowers possible will enjoy the safest and most affordable options for sustainable credit available through the QM,’ the letter added.
The trade groups that signed the letter include the American Bankers Association; the American Escrow Association; the American Financial Services Association; the American Land Title Association; the Community Mortgage Banking Project; the Consumer Mortgage Coalition; the Community Mortgage Lenders of America; the Consumer Bankers Association; Habitat for Humanity; the Housing Policy Council of the Financial Services Roundtable; the Independent Community Bankers of America; the Leading Builders of America; the Mortgage Bankers Association; the Mortgage Insurance Companies of America; the National Association of Federal Credit Unions; the National Association of Hispanic Real Estate Professionals;Â the National Association of Home Builders; the National Association of Realtors; The Real Estate Services Providers Council Inc.; The Realty Alliance; the Securities Industry and Financial Markets Association; and the U.S. Chamber of Commerce.