The NCUA and four other federal regulators have responded to creditor concerns over liability under the Equal Credit Opportunity Act for offering only qualified mortgages, as defined by Consumer Financial Protection Bureau regulations.
The CFPB’s Ability-to-Repay rule implements parts of the Dodd-Frank Act that require creditors to make a reasonable determination that a consumer is able to repay a mortgage loan before issuing credit.
“The agencies do not anticipate that a creditor’s decision to offer only Qualified Mortgages would, absent other factors, elevate a supervised institution’s fair lending risk,” said their statement released on Tuesday. “There are several ways to satisfy the Ability-to-Repay Rule, including making responsibly underwritten loans that are not Qualified Mortgages.”
The CFPB does not “believe that it is possible to define by rule every instance in which a mortgage is affordable for the borrower,” the statement said.
“Nonetheless, the agencies recognize that some creditors might be inclined to originate all or predominantly Qualified Mortgages, particularly when the Ability-to-Repay Rule first takes effect. The rule includes transition mechanisms that encourage preservation of access to credit during this transition period.”
The CFPB, Federal Reserve, Office of the Comptroller of the Currency, FDIC and NCUA also said they recognize that the loans some creditors originate will already satisfy the Qualified Mortgage requirements.
The agencies recommend that creditors continue to evaluate fair lending risk by “implementing effective compliance management systems” and closely monitoring their policies and practices.