In a comment letter to the CFPB yesterday, the American Bankers Association offered support for recent proposals that would make changes to the Qualified Mortgage rule and ultimately allow the temporary “GSE patch”—which grants QM status to loans eligible to be purchased or guaranteed by Fannie Mae and Freddie Mac—to expire once the changes take effect.
ABA welcomed the CFPB’s proposal to replace the use of the 43% debt-to-income ratio as QM qualification standard and replace it with a price-based approach that would compare the loan’s annual percentage rate to the average prime offer rate for a comparable transaction. The proposal would also remove Appendix Q, which ABA also supported. “The proposed framework will promote access to credit for all communities in a safe and sustainable way,” the association said. “These important modifications to the ATR-QM rule will improve the effectiveness of the law, enhance competition and market innovation, and mitigate negative impacts caused by the pending lapse of the temporary GSE Patch.”
In its comments, ABA advised the CFPB to leave in place the general requirement to consider and verify consumers’ ability to repay—with robust clarifications that would ensure compliance—and noted that the APR should not exceed the average prime offer rate by more than two percentage points. ABA also urged the bureau to revisit the current threshold separating the QM safe harbor from rebuttable presumption treatment.
ABA also joined a broad coalition of housing finance stakeholders in a separate comment letter calling on the CFPB to clarify that a QM/safe harbor designation does not confer compliance or override non-compliance with the Fair Housing Act, Equal Credit Opportunity Act or other consumer protection laws; increase the safe harbor threshold; increase the QM cap; and modify the treatment of short-reset adjustable-rate mortgages.