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House subcommittee examines QM rule
WASHINGTON (1/15/14)--Rep. Shelley Moore Capito (R-WVa.), chairman of the House Financial Services subcommittee on financial institutions and consumer credit, said at a Tuesday hearing that she is concerned that the Consumer Financial Protection Bureau's Qualified Mortgage regulation takes a "one-size-fits-all approach" that will "severely hamper the ability of community lenders to tailor products to borrowers."
 
"No two borrowers have the same credit profile," Capito noted during her subcommittee's hearing entitled, "How Prospective and Current Homeowners Will Be Harmed by the CFPB's Qualified Mortgage Rule."
 
The Credit Union National Association submitted a statement for the hearing record, calling for credit unions to be exempt from new Ability to Repay/Qualified Mortgage (ATR/QM) rules and stating that the CFPB has the legal authority to provide an exemption from the ATR/QM rule.
 
The CUNA statement tells lawmakers that, although it is early to assess the impact on the housing market of the ATR/QM rule that went into effect Jan. 10, credit unions are concerned that it will have a negative impact on their mortgage lending and operations.
 
"Credit unions agree that it is always in the best interest of the credit union to assess a member's ability to repay when offering them a loan. That is what credit unions routinely did, even before the adoption of the rule," the CUNA statement says.

CUNA warns that the ATR/QM rule was designed to address problems credit unions did not engage in, and there is a very strong statutory and public policy case to be made that credit unions ought to be fully exempt from the QM rule. "That case is also based on how credit unions are structured, which produces a set of operational incentives that is different from for-profit financial institutions, and also on the historical performance of credit union mortgage loan portfolios," CUNA says in the statement.
 
During the hearing, Rep. Patrick Murphy (D-Fla.) broached concerns regarding the amount of time lenders have to implement the new CFPB mortgage rules, which is another key issue raised by CUNA.
 
The panel of witnesses, which included Daniel Weickenand, CEO of  Orion FCU, testifying on behalf of the National Association of Federal Credit Unions, warned that it will be challenging if not impossible to offer non-QM loans and that the rules will drive up consumers' costs for non-QM mortgages.
 
Also testifying at the hearing were:
  • Jack Hartings, president/CEO, The Peoples Bank Co., on behalf of the Independent Community Bankers of America;
  • Bill Emerson, CEO, Quicken Loans, Inc., on behalf of the Mortgage Bankers Association; 
  • Frank Spencer, president/CEO, Habitat for Humanity Charlotte; and,
  • Michael D. Calhoun, president, Center for Responsible Lending.


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