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NAFCU seeks feedback on potential QM patch changes
NAFCU Wednesday sent a Regulatory Alert to member credit unions seeking comment on the CFPB's advance notice of proposed rulemaking regarding revisions to the definition of a qualified mortgage (QM) under the Truth in Lending Act (TILA). The Temporary Government-Sponsored Enterprises (GSE) QM Patch allows loans purchased or guaranteed by the GSEs to exceed the bureau's 43 percent debt-to-income ratio.
In the Regulatory Alert, NAFCU notes that the CFPB is considering revisions to the definition in light of the expiration the temporary GSE QM loan category, currently set for Jan. 10, 2021. If the CFPB allows the patch to expire, credit unions will no longer be able to originate temporary GSE QM loans. The bureau is also seeking feedback on a borrower's ATR and changes to Appendix Q.
"Under the current QM definition, the QM Patch has been a key factor in credit unions' ability to lend to members of their communities, especially those of low- and moderate-income, to achieve homeownership. We will support a solution that allows credit unions to continue to lend to those communities," said NAFCU Executive Vice President of Government Affairs and General Counsel Carrie Hunt following the bureau's plan to allow the ATR/QM patch expire.
NAFCU would like members to specifically consider:
- if an ATR assessment should retain a direct measure of a consumer's personal finances, such as debt to income (DTI) ratio or residual income;
- whether the threshold should be increased or decreased if DTI is retained;
- if Appendix Q should be replaced with a "reasonable method" option or a safe harbor for a widely used and adopted method;
- how much time credit unions would need to change current practices following the issuance of a final rule with a new QM loan definition; and
- if credit unions have shifted away from temporary GSE QM loans or GSE-eligible loans.
View the Regulatory Alert – featuring a new template that makes it easier for credit unions to learn about regulatory proposals and provide comments – here. Credit unions can submit comments to NAFCU until Aug. 30; comments are due to the CFPB Sept. 13.