Removing Barriers Blog

CUNA and Trades write to CFPB about QM Safe Harbor
Posted September 12, 2019 by CUNA Advocacy
Earlier this week, CUNA joined other trade associations in writing to the CFPB urging the Bureau to retain its Qualified Mortgage (QM) safe harbor and product features but remove the debt-to-income (DTI) requirement for prime and near-prime loans when the government-sponsored enterprises’ (GSE) "patch" expires.

The Temporary GSE QM, a category of QM eligible for purchase by Fannie Mae or Freddie Mac, is scheduled to expire in January 2021 or after a short extension. The CFPB issued an advance notice of proposed rulemaking on whether to propose revisions to the definition of QM in light of the planned expiration.

The signers of the letter propose the following for the ATR-QM rule, to coincide with the expiration of the GSE Patch, to preserve access to sustainable loans for creditworthy borrowers and avoid market disruption:

  • Eliminate from the general QM category the DTI ratio requirement and the associated Appendix question 1.
  • Maintain and enhance the existing ability-to-repay (ATR) regulatory language; and
  • Maintain the existing QM statutory safe product restrictions that prohibit certain risky loan features (e.g., no terms over 30 years, no negative amortization, no interest-only payments, no balloon payments, documented and verified income, etc.) and clarify provisions related to documentation and verification of income.