Removing Barriers Blog

House votes to expand QM status to portfolio loans
Posted November 18, 2015 by CUNA Advocacy

The House approved a bill today that would allow would allow credit unions and other lenders to treat mortgages held in portfolio as qualified mortgages (QM) for purposes of the Consumer Financial Protection Bureau’s (CFPB) mortgage lending rules. The vote was 255-174. The measure got the endorsement of the House Financial Services Committee in July, with a vote of 38-18 in favor.

We have long supported this bill known as the Portfolio Lending and Mortgage Access Act (H.R. 1210), and sent a letter earlier this week to all members of Congress urging a yes vote. Our President/CEO Jim Nussle urged House lawmakers to approve the legislation that would help reduce operational barriers for credit unions and expand access to credit for members. 

This bill amends the Truth in Lending Act (TILA) to create a safe harbor from lawsuit for creditors that are depository institutions for any failure to comply with certain requirements with respect to a residential mortgage loan, and the banking regulators are required to treat such a loan as a qualified mortgage, if the creditor has, since the loan's origination, held it on its balance sheet and all prepayment penalties with respect to the loan comply with specified limitations.

A safe harbor from lawsuit is also created for mortgage originators for steering a consumer to a residential mortgage loan if:

  • the creditor is a depository institution and has informed the mortgage originator that it intends to hold the loan on its balance sheet for the life of the loan, and
  • the mortgage originator informs the consumer that the creditor intends to do so.

We maintain that when a credit union is willing to hold a loan in its portfolio, thereby having “skin in the game,” there should be the presumption that the loans is as worthy as a standard QM loan even if it might not meet all of the technical requirements.