Agencies: QM-only policy won’t flag ECOA
Oct. 23, 2013 – Credit unions that decide only to issue mortgages that meet CFPB’s “qualified mortgage” standard will not be flagged for heightened “fair lending risk,” NCUA, CFPB and banking regulators said in guidance issued Tuesday.
The agencies said the practice also will not be seen as running afoul of the disparate impact doctrine applied under the Equal Credit Opportunity Act.
“In the Agencies’ view, the requirements of the Ability-to-Repay Rule and ECOA are compatible. ECOA and Regulation B promote creditors acting on the basis of their legitimate business needs,” they said in a statement. “For the reasons described in the statement, the five 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.”
While NAFCU strongly supports fair lending, it has expressed concerns to NCUA and CFPB about whether credit unions that issue only qualified mortgages will be at odds with ECOA. “While this statement does not, in and of itself, address NAFCU’s concerns, it is a step in the right direction, and we appreciate NCUA’s and the other agencies’ clarification,” said NAFCU Senior Regulatory Affairs Counsel Tessema Tefferi.
Guidance on QM and fair lending risk