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Tuesday, March 10, 2015

CFPB May Modify Qualified Mortgage Rules if GSE Reform Stalls

By ABIA Outside Counsel, McIntyre & Lemon, PLLC

The American Banker reports that the CFPB may modify its “qualified mortgage” (QM) rule if efforts to reform the nation’s housing finance system remain at a standstill.

According to American Banker, “[t]he underwriting rule, which limits legal liability for ultrasafe QM loans, effectively exempts mortgages backed by Fannie Mae or Freddie Mac for another six years, or until Congress creates a new housing finance system in place of the two government-sponsored enterprises. But lawmakers’ inability to advance GSE reform has prompted concerns the CFPB will hit the deadline without a fix for the huge amount of GSE-backed loans that could one day lose their QM status.”

CFPB Director Richard Cordray told the House Financial Services Committee that the CFPB will review the QM rule well before the GSE provision expires. Cordray noted that the status of the GSE-backed loans was considered when the QM rule was first drafted. The CFPB initially exempted GSE-backed loans from the QM rule because the bureau wanted to avoid the uncertainty that GSE-mortgages faced while Congress was considering how to reform the housing markets and Fannie and Freddie. Cordray assured the House committee that there was plenty of time to make “adjustments as needed” if Congress still has not resolved what to do with the GSEs in the coming years.

American Banker (sub. req.).