Tefferi welcomes FHFA alignment of QRM to QM
Oct. 30, 2013 – NAFCU on Tuesday lodged strong support for the Federal Housing Finance Agency’s alignment of its “qualified residential mortgage” standard with the “qualified mortgage” standard set by CFPB and offered suggestions to improve the rule further.
Tessema Tefferi, NAFCU’s senior regulatory affairs counsel, said in a letter Tuesday that the FHFA's move to align the two standards, long sought by NAFCU, would help “decrease the already steep level of regulatory burden” faced by credit unions and other lenders, “as well as alleviate market uncertainty and help remove obstacles to credit availability.”
The FHFA proposal would require mortgage loan securitizers to retain at least 5 percent of the credit risk on mortgages they securitize, but it would exempt securities made up exclusively of loans written to QRM standards. Credit unions generally aren’t directly subject to the QRM standard, but the proposed rule will have an effect on mortgage market liquidity.
Tefferi noted specific support for FHFA’s elimination of a loan-to-value threshold – a factor that is not reflected in CFPB’s QM standard – from its proposed rule.
He also suggested improvements in the QRM proposal that NAFCU is also urging for CFPB’s QM. He said the agencies should, for both QRM and QM:
- allow loan terms up to 40 years (up from the current 30);
- exclude affiliate fees from the calculation of points and fees;
- eliminate or greatly increase the 43 percent debt-to-income limit;
- remove the distinction between the CFPB “safe harbor” vs. “presumption of compliance” for higher-priced mortgages.
NAFCU comment letter