Jerry Reed, chief lending officer for the $5.3 billion Alaska USA FCU, will tell the House Subcommittee on Financial Institutions and Consumer Credit during a hearing set for Tuesday that the Consumer Financial Protection Bureau’s qualified mortgage rule could severely restrict lending.
“Credit unions worry that the QM rule will make it all but impossible for credit unions to write non-QM loans because the standard, designed to be an instrument of consumer protection, may serve as an instrument of prudential regulation, effectively setting a bureaucratic standard for loan quality,” Reed said in his prepared testimony.
He added that the Anchorage, Alaska-based credit union has significant concerns that NCUA examiners will determine that non-QM loans are a safety and soundness concern and could assign a riskier CAMEL rating to credit unions that keep the loans on their books.
“Further, we have concerns that there may not be a viable secondary market into which credit unions can sell non-QM loans,” he said.
The 10 a.m. Tuesday Financial Services subcommittee hearing will examine how the Dodd-Frank Act hampers home ownership; Reed is representing CUNA at the hearing. Other witnesses include Kentucky Department of Financial Institutions Commissioner Charles Vice; James Gardill, chairman of the $6 billion WesBanco Inc. of Wheeling, W.Va.; Mortgage Bankers Association Chairman Debra Still and National Association of Realtors President Gary Thomas.
The hearing continues the subcommittee’s study of the impact of the CFPB’s qualified mortgage rule that will go into effect in January.