November 07, 2013

Cordray: Early QM exams to seek good-faith effort

Nov. 8, 2013 – CFPB Director Richard Cordray on Thursday said there will be no delay in implementation of the bureau's ability-to-repay/qualified mortgage rule but that examinations in the first few months will look for a "good faith effort" to comply, not "perfection."

"ComeJan 10,the rule will be ineffect, but we are just looking for a good-faith effort in compliance for the first few months," he said during Politico's Morning Money Breakfast in Washington, which was attended by by NAFCU's PJ Hoffman, regulatory affairs counsel, and Patty Briotta, director of public relations. "We have also talked to other regulators about this."

NAFCU and a good many members of Congress have pressed Cordray to delay implementation of the QM regulation for at least a year. In a survey this May, 44 percent of NAFCU members responding said they planned to cease offering non-QM loans once the CFBP rule takes effect, and 44 percent said they would reduce originations of loans that do not meet the QM standard.

During Thursday's breakfast, Cordray reiterated that the bureau views non-QM loans as a "good business opportunity" and that any costs from ability-to-repay challenges are estimated to be low, about 15 basis points on some loans. He also noted the rule's carve-outs for lenders based on loan volume and asset size. But NAFCU holds that credit unions – which did not engage in the practices that spurred the housing downturn and, as a result, these rules under the Dodd-Frank Act – should not be subject to any of the CFPB's mortgage regulations.