The Consumer Financial Protection Bureau today issued its assessment of the ability-to-repay/Qualified Mortgage rule, as required by the Dodd-Frank Act. While the report addressed matters relating to the costs and benefits of each segment of the rule, as well as overall impact on credit, it did not include a cost-benefit analysis. The bureau noted that it is considering whether to include such analyses in future assessments and reports.
According to the report, the rule had negligible effects on borrowers’ ability to access credit and on the cost of mortgages at the aggregate market level. However, in a qualitative survey of mortgage lenders, a majority indicated that they had changed their business models as a result of the rule. These changes included “increased income documentation or increased staffing, while others mentioned adopting a policy of not originating non-QM loans,” the report said.
Significantly, the report also confirmed the need to resolve the status of the rule’s temporary GSE QM provision, which grants qualified mortgage status to loans eligible to be purchased or guaranteed by Fannie Mae or Freddie Mac, and which will sunset when the GSEs leave conservatorship in 2021. ABA has consistently raised concerns that markets have become overly dependent on what was intended to be a temporary patch, and the report concedes that the continued prominence of the GSE QM signals that a key goal of the regulation “has not been met.”
While the CFPB did not make any recommendations for improving the rule, it noted that “the issuance of [the report] is not the end of the line,” and that it would continue to seek input from industry stakeholders on potential changes. ABA staff are currently in the process of reviewing the report, will continue to work constructively with the bureau to advocate for improvements to the rule.