Weickenand: QM rule will hurt communities, consumers
House Financial Services Subcommittee on Financial Institutions and Consumer Credit Chairman Shelley Moore Capito, R-W.Va., with NAFCU witness Daniel Weickenand. (Dietsch photo)
Jan. 15, 2014 – Daniel Weickenand, CEO of Orion FCU in Memphis and a NAFCU Board member, told members of a House Financial Services subcommittee that offering non-qualified mortgages is not in the best interest of his credit union or members during Tuesday’s hearing on CFPB’s new mortgage rules.
“While some institutions may start charging a premium on their loans to account for the additional risk associated with non-QMs, we do not feel this is in the best interest of our credit union, our members and our community. Consequently, we have decided to cease to offer non-QM loans at this time,” Weickenand stated in his opening testimony.
Rep. Sean Duffy, R-Wis., mentioned during the hearing that because of the risks involved, those credit unions that may want to help those in their community get a home may decide not to make the loans anymore because of the new QM rules. He also expressed concern that the way the QM rules are written, low-income and minorities will be left out of getting a mortgage from a credit union or small community bank if certain loans are no longer made. Weickenand responded, saying it’s not serving his community “if I know I have to charge people more to give them the same loan I would have last year because of the new rules.”
Asked by Rep. Carolyn Maloney, D-N.Y., what suggestions could be made to the CFPB rules to arrive at the right balance of protecting the economy while ensuring low-income workers access to loans, Weickenand assured her that he’s been doing “QMs” since he entered the industry as he knows his community and how to make those decisions.
Tuesday’s hearing also touched on the small-creditor exemption and the desire among credit unions and community banks to see the exemption threshold increased from 500 annual loans.
Rep. Lynn Westmoreland, R-Ga., wondered what Weickenand and other witnesses would tell their members if they were to turn down their loan application because it didn’t meet the QM standard. Weickenand said that since that product wasn’t being offered in the first place, they would have to tell them that “unfortunately, we couldn’t serve their needs.”
Rep. Blaine Luetkemeyer, R-Mo., entered into the record a response letter from CFPB Director Richard Cordray admitting that community banks and credit unions did not do the type of lending that led to the financial crisis. He then asked the witnesses why they aren’t doing non-QM loans. Weickenand said the “idea of charging more for a loan is something I can’t stomach.” He added that he wouldn’t be able to off-load those loans because there is no secondary market for non-QMs.
Also on the witness list with Weickenand: President and CEO of The Peoples Bank Co. Jack Hartings on behalf of the Independent Community Bankers of America; CEO of Quicken Loans, Inc., Bill Emerson on behalf of the Mortgage Bankers Association; President and CEO of Habitat for Humanity in Charlotte Frank Spencer; and President of Center for Responsible Lending Michael Calhoun.
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