If a credit union or other mortgage lender makes the business decision to only offer qualified mortgages, that fact alone would not increase the likelihood of a fair lending exam.
So said the NCUA and four other federal regulators Oct. 22 when they released guidance that clarified concerns over qualified mortgages and the resulting liability under the Equal Credit Opportunity Act.
The Consumer Financial Protection Bureau’s ability-to-repay rule implements parts of the Dodd-Frank Act that requires creditors to make a reasonable determination a consumer is able to repay a mortgage loan before extending 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 the guidance. “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 NCUA, FDIC, CFPB, Federal Reserve and Office of the Comptroller of the Currency also said in the release that they recognize the loans some creditors originate will already satisfy the Qualified Mortgage requirements.
The agencies recommended that lenders continue to evaluate fair lending risk by implementing effective compliance management systems and closely monitoring their policies and practices.