WASHINGTON (10/30/13)--The Qualified Residential Mortgage (QRM) definition and requirements proposed in August in a joint regulators' rule addressing credit risk retention is a "marked improvement" over the agencies' original proposal issued in April 2011, according to the Credit Union National Association.
Under the current proposal, the definition of QRM would be aligned with the Consumer Financial Protection Bureau's definition of a qualified mortgage (QM). This was a development that CUNA had strongly urged.
In a comment letter submitted Tuesday, CUNA Senior Vice President and Deputy General Counsel Mary Dunn wrote, "The 2011 proposal was far too restrictive, including a 20% down payment requirement and front-end and back-end debt-to-income (DTI) ratio requirements."
She said that CUNA has an overarching concern that the QM/QRM should never become the only type of mortgage that regulators will permit or that the secondary market will accommodate.
"However, absent some flexibility for creditors under this rule, that is precisely what we believe will happen," Dunn warned.
She added that while CUNA supports a QRM standard that is aligned with the CFPB's QM, CUNA continues to have serious concerns about the rule's requirement for borrowers' 43% DTI cap.
"We urge the agencies to work with mortgage lenders to help ensure non-QM and non-QRM loans will be available to borrowers and acceptable to regulators and the secondary market," Dunn wrote.
She added that CUNA would welcome an opportunity to talk with the agencies further about the credit union views expressed in the CUNA letter.
The joint rule was proposed by the Federal Reserve Board, Federal Deposit Insurance Corp., U.S. Department of Housing and Urban Development, Federal Housing Finance Agency, Office of the Comptroller of the Currency, and the Securities and Exchange Commission.
To read CUNA's complete comments on the 500-plus page proposal, use the resource link below.