Oct. 17, 2012 – A safe harbor sought by NAFCU in connection with the origination of “qualified mortgages” – still being defined by the Consumer Financial Protection Bureau – could be gaining traction if recent news reports are any indication.
Both The Wall Street Journal and Slate’s Moneybox blog reported the bureau is looking at granting a safe harbor for lenders hewing to the QM standards in the CFPB’s proposed rule on residential mortgage loans and borrowers’ ability to repay. The safe harbor would better protect lenders targeted by litigation alleging violations of the rule’s dictate on ability to repay. The rule is still in proposed stage but is expected to be finalized in the next few months.
CFPB Director Richard Cordray reached out to NAFCU President and CEO Fred Becker last month on the bureau’s various mortgage and remittance rulemakings. He said the bureau wants more dialog on the rules' impact on credit unions and their members.
The WSJ story from Monday quotes Cordray’s comments given during a hearing last month by the Senate Banking Committee. “It doesn’t do anybody any good for us to develop an elaborate set of protections if nobody’s going to then lend money to consumers,” he testified. “We absolutely don’t want to make a judgment that’s going to freeze up or further constrict credit in the mortgage market.”
NAFCU, in its own comment letter and numerous letters with other trades to the CFPB and lawmakers, has noted that QM standards with no safe harbor would discourage smaller lenders from providing mortgages.