Amended Final QM Rule Gives New Exemptions to Small Lenders
The Consumer Financial Protection Bureau on Wednesday issued an amended final qualified mortgage rule that provides new exemptions for small lenders.
In its amended rule, the CFPB will allow lenders with fewer than $2 billion in assets that originate 500 or fewer first mortgages to count the loans as qualified mortgages even if the borrower’s debt-to-income ratio exceeds 43%, provided the institution keeps the mortgages on its books.
The rule also provides a two-year transition period that will allow small lenders to make certain balloon loans that will qualify as qualified mortgages.
“The bureau expects to continue to study issues concerning access to credit and balloon lending by small creditors,” the CFPB said in a release.
The rule will further allow small lenders to charge a higher annual percentage rate for certain first-lien qualified mortgages while maintaining a safe harbor for the rule’s ability-to-repay requirements.
“NAFCU appreciates the CFPB making these revisions, and we will see if they go far enough to ease the requirements so that credit unions will feel confident in continuing to offer qualified mortgages to their members,” said NAFCU President/CEO Fred Becker.
“Credit unions have been and continue to be readily recognized as responsible, prudent lenders. They know their members and their circumstances well and work with them to provide the right mortgage for their needs and should be allowed to continue to do so,” Becker said.
He added that NAFCU will continue to review the revisions and push for additional changes to the rule, particularly those addressing debt-to income ratio and points and fees.
The CFPB also separately issued a rule Wednesday that delays the effective date of a rule that would prohibit creditors from financing certain credit insurance premiums in connection with certain mortgage loans. The provision would have taken effect June 1, but has a new effective date of Jan. 10, 2014.
“The bureau’s delaying of the effective date for prohibiting certain credit insurance premium financing is key in that it will give credit unions more time to sort out what has proved to be a confusing element of the Dodd-Frank law,” said CUNA President/CEO Bill Cheney.
CUNA had asked the CFPB for a new effective date in April. Cheney said he appreciates that CFPB Director Richard Cordray and bureau staff were responsive to the trade association’s concerns.