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March 02, 2015

New bill gives QM safe harbor to loans in portfolio

Rep. Andy Barr, R-Ky., is expected today to reintroduced a NAFCU-backed bill ensuring residential mortgage loans held in portfolio by originators, such as credit unions, automatically attain the qualified mortgage safe harbor under CFPB rules.

NAFCU holds that credit unions should be allowed to continue writing non-QM loans where necessary and appropriate for their members, without fear of retribution from examiners.

Barr's bill clarifies that loans qualifying for this safe harbor be treated as a QM loan for the purposes of relevant regulations. Also under this bill, mortgage originators are protected from liability for steering customers to non-QM loans if those loans qualify for the bill's safe harbor and creditors that acquire such loans in the event of the original creditor's failure would also receive the safe harbor if the loans remain in portfolio.

Under Barr's legislation, if a loan is later securitized and moved off portfolio, it no longer qualifies for this safe harbor and the lender is again subject to liability relating to originating a non-QM loan.

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