October 01, 2020

NAFCU offers support for CFPB seasoned QM proposal, calls for GSE patch extension

CFPBIn a letter sent to the bureau Wednesday, NAFCU Senior Regulatory Affairs Counsel Kaley Schafer offered support for the CFPB's proposed rule to create a new category of seasoned qualified mortgages (QM) as it would enhance access to credit for low- to moderate-income borrowers and underserved markets with the requisite ability-to-repay in addition to reducing the negative impacts posed by the bureau's proposed general QM definition.

NAFCU previously sent members a Regulatory Alert breaking down the proposed rulemaking and highlighting how the changes would impact credit unions.

In the letter, Schafer noted the proposed rule would increase access to credit and allow credit unions to serve some members previously served by the temporary government-sponsored enterprises (GSEs) QM loan patch. However, because it is not a replacement for the GSE patch, Schafer reiterated the association’s call for the bureau to extend the GSE patch to at least 18 months after the finalization of this proposed rule to allow for a transition period.

“NAFCU has long advocated for a viable GSE Patch alternative that affords the same legal protections and assurances for lenders as the GSE patch,” Schafer wrote. “NAFCU encourages the bureau to utilize their broad authority under [the Truth in Lending Act] to provide a viable replacement for the GSE patch.”

Previously, the bureau issued a notice of proposed rulemaking that would allow for a temporary extension of the GSE Patch which would be in effect until the proposed amendments to the general QM loan definition take effect. The association highlighted the extension of GSE QM Patch's sunset date and how the extension would impact credit unions in a Regulatory Alert to credit unions sent last month.

NAFCU joined with nine other organizations to urge CFPB Director Kathy Kraninger to delay rulemakings on the general QM definition and extend of the patch in the wake of the coronavirus pandemic. However, when speaking at NAFCU’s Virtual Congressional Caucus in September, Kraninger noted she expects the final rule to be issued in the next few months.

The association will continue its effort to ensure that credit unions are given enough time to prepare for the elimination of the GSE patch and urge the bureau to consider a longer extension.