ABA Urges Careful Consideration of Cost, Reg Burden in ATR Review

ABA yesterday urged the Consumer Financial Protection Bureau to carefully consider costs and burdens associated with its Ability-to-Repay/Qualified Mortgage rule as it conducts a required assessment of the final rule’s effectiveness.

While ABA generally supported the bureau’s proposed assessment plan, it noted that the review should not only focus on the consumer safety objectives of the ATR rules, but also take into account whether the mortgage markets are  operating transparently and efficiently and facilitating access and innovation. The association added that the CFPB’s review should thoroughly examine overall compliance costs imposed by the rule.

A key focal point of the assessment should be an analysis of the temporary category of QM loans for loans eligible to be purchased or guaranteed by Fannie Mae and Freddie Mac, ABA said, noting that the temporary GSE QM “is a critical provision of the law and one that prevented major disruptions in banks’ transition into the new ability-to-repay standards.” Acknowledging that the special GSE provisions must eventually sunset, the association said that the ATR rules “must advance towards a uniform and transparent set of guidelines, criteria and compensating factors that are objective and policy-based, and certainly independent of any institutional market player.”

In addition, ABA recommended several modifications to the rule that would incentivize the expansion of safe lending activities, including a safe harbor for QM loans held in portfolio, increasing or eliminating the 43 percent debt-to-income standard, eliminating the points and fees test for QM loans and raising the threshold for compliance with the servicing rule 5,000 mortgages to 25,000 mortgages. For more information, contact ABA’s Rod Alba.


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