Newsroom
NAFCU, coalition meet with FHA Commissioner on QM
Members of NAFCU’s Regulatory Affairs team attended a coalition meeting with Federal Housing Administration (FHA) Commissioner Brian Montgomery yesterday to discuss issues related to the definition of qualified mortgage (QM) and the potential expiration of the government-sponsored enterprise (GSE) patch.
The CFPB initiated an advanced notice of proposed rulemaking to address the upcoming expiration of the category of loans that obtain QM status due to their eligibility for purchase or guarantee by the GSE Patch. CFPB Director Kathy Kraninger indicated in a letter to lawmakers in January that the bureau plans to extend the Ability to Repay/Qualified Mortgage rule’s exemption for loans eligible for purchase by the GSEs from its 43 debt-to-income (DTI) cap (commonly referred to as the GSE Patch). NAFCU then joined with eight other trade groups in a letter urging the bureau to continue using a modified DTI ratio and suggest changes to Appendix Q.
Kraninger also explained in the letter that the bureau is proposing an amendment to the rule to move away from the DTI and toward an average prime offer rate (APOR) threshold. The coalition discussed this proposal with Montgomery during Wednesday's meeting.
NAFCU has previously encouraged the CFPB to adopt viable alternatives to the QM patch and also highlighted the benefits of the GSE patch in providing credit unions with the ability to sell their loans into the secondary market – generating "vital" liquidity enabling credit unions to make more loans to their members, especially those of low- or moderate-income.
Earlier this year, the association joined with 36 other organizations in a letter sent to six agencies asking to delay the review of certain provisions of the Credit Risk Retention Rule until after the CFPB’s QM rulemaking is complete. In the letter, the coalition pointed out that the definition of qualified residential mortgage (QRM) can be “no broader” than the definition of QM, and that “QM and QRM are linked by law.”
NAFCU has been the leading voice for credit unions during housing finance reform discussions and has previously met with representatives at the CFPB to discuss the QM patch. Montgomery, when speaking at NAFCU’s 2019 Congressional Caucus, expressed the FHA’s support of credit unions, noting housing reform plans that include modernization of the FHA’s technology to make it easier for more Americans to participate in FHA programs.