Weickenand: Rule will impact non-QM availability
Jan. 14, 2014 - Daniel Weickenand, CEO of Orion FCU in Memphis and a NAFCU Board member, will tell lawmakers about his credit union’s decision to stop offering non-qualified mortgage loans today during a hearing before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit.
Despite the CFPB’s assurances that credit unions are not required to only offer QM loans, Weickenand says in his testimony that many have no choice.
“In today’s lending environment, with interest rates at record lows, margins on non-QM loans will be very narrow. When you take into account the additional legal liability associated with non-QM loans, this margin will be even narrower," he says. "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.”
He continues, “I cannot tell you how difficult this decision has been. Orion takes great care in placing our members with the right mortgage product, and the QM standard will inevitably force us to turn many creditworthy borrowers away.”
The hearing, “How Prospective and Current Homeowners Will Be Harmed by the CFPB’s Qualified Mortgage Rule,” will be chaired by Rep. Shelley Moore Capito, R-W.Va.
The new rules went into effect on Friday, and NCUA and CFPB have been pushing out information on the rules steadily over the past two weeks. NCUA has sent a Letter to Credit Unions that shares the agency's supervisory guidance on the QM rule, and CFPB sent its own letter to credit unions providing a general overview.
Meanwhile, NAFCU President and CEO Dan Berger has written CFPB Director Richard Cordray to urge that the bureau take into the account the information NAFCU plans to provide as it monitors the rules’ implementation and learns more about its impact on credit unions.
NAFCU’s compliance division has posted several resources for following the new CFPB mortgage rules on the association’s website and is addressing them regularly on the Compliance Blog.
"QM is here; NAFCU testifies Tuesday," 1/10/14
NAFCU Mortgage Rules Compliance Page