Removing Barriers Blog

CUNA submits comments on CFPB's “Qualified Mortgage (QM) Definition Under the Truth in Lending Act (Regulation Z): General QM Definition

This afternoon, CUNA submitted comments to the CFPB regarding their interim final rule titled, “Qualified Mortgage (QM) Definition Under the Truth in Lending Act (Regulation Z): General QM Definition.” This rule would amend Regulation Z to, among other things, replace the 43% debt-to-income (DTI) requirements and Appendix Q DTI calculation requirements with a more streamlined price-based approach. In short, the new rule would require the same product-feature and underwriting requirements and limits on points and fees as the old definition, but replaces the DTI test with a price threshold requiring which states that the annual percentage rate (APR) cannot exceed the average prime offer rate (APOR) for a comparable transaction by more than two percentage points as of the date the interest rate is set.  In addition, in a separate rulemaking, the CFPB proposed extending the sunset date for the related Temporary GSE QMs until the effective date of this new General QM definition.  We commented on the GSE QM sunset in August.

“CUNA has submitted numerous comments to the CFPB on the ATR/QM Rule calling for the elimination of the 43% DTI and Appendix Q requirements,” the letter states.  “We appreciate this amendment as both a positive response to those requests and an important step in turning the General QM into a viable option for credit union originations.”

In addition to that general support, the letter also offers specific recommendations, including allowing full “safe harbor” protections for all General QM loans, and not just those with an APR that is less than 1.5% over APOR.  The letter further asks the Bureau to reject more complicated alternatives to the proposed price-based approach and reiterates prior requests for a longer transition period for the GSE QM to ensure that credit unions and other lenders have time to adjust to the new General QM definition.

CUNA will continue to work with the CFPB to ensure credit unions members continue to have access to responsible, affordable mortgage loans from community-based lenders.