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May 30, 2013

NAFCU to seek added QM improvements

May 30, 2013 – NAFCU President and CEO Fred Becker welcomed the CFPB's revisions to its ability-to-repay/qualified mortgage rule yesterday and said the association will advocate for additional relief for credit unions going forward.

"NAFCU appreciates the CFPB making these revisions," Becker said, "and we will see if they go far enough to ease the requirements so that credit unions will feel confident in continuing to offer qualified mortgages to their members. We will continue to review these revisions and continue to push for additional changes, especially in regards to debt-to-income ratio and points and fees."

Wednesday's final rule, effective Jan. 10, creates a new category of qualified mortgage for small creditors, including credit unions. This covers loans originated and held in portfolio for at least three years (in most cases) by small institutions with $2 billion or less in assets and that originate 500 or fewer first-lien mortgages annually. This applies even if the institutions do not operate predominantly in rural or underserved areas.

Loans covered by this new category of QM will not be subject to the 43 percent debt-to-income threshold applied in the broader rule, but they still must satisfy the points-and-fees and other criteria. However, the rule excludes from the points-and-fees calculation:

  • loan originator compensation paid by a consumer to a mortgage broker and that is already counted in the finance charge calculation;
  • compensation paid by a creditor to its loan officers; and
  • credit extended under programs administered by a housing finance agency under the Emergency Economic Stabilization Act.

The rule, discussed by Becker and CFPB Director Richard Cordray by phone Wednesday, also exempts from the ability-to-repay requirements all certified community development financial institutions. Any credit union with NCUA's low-income designation can receive certification as a CDFI. NAFCU is preparing a Final Regulation for members.

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