Sunday
November 23, 2014

CFPB Talks QM in Blog Post

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CFPB Talks QM in Blog Post

The Consumer Financial Protection Bureau (CFPB) shared some insight into its process and goals for the qualified mortgage (QM) rule it released last month. The post gives loan servicers, industry watchers, and consumers a look at its thinking behind the rulemaking. Under the rule, which implements a part of Wall Street reform enacted three years ago, lenders must make sure loan applicants demonstrate a reasonable ability to repay in order for the loan to be considered a "qualified mortgage," and it sets out the standards by which that’s measured.

“We believe that our ability-to-repay rule is an important step toward bringing certainty to the mortgage market and the recovery,” Peter Carroll, assistant director of mortgage markets at CFPB, wrote.

The agency says it took into account the needs of both consumers and the mortgage industry in making the rule.

“Our rule should not unduly restrict lenders’ ability to make responsible loans,’” Carroll added. “Over time, we expect to see responsible lending practices flourish for all residential mortgage loans.”

Earlier this month, the CFPB issued a guide to aid the implementation of the new mortgage rules. Among the propositions, the agency plans to release plain-language written summaries and video guides for the new rules this summer. The CFPB added that the transition should not be overly jarring, as “the vast majority of loans originated today will meet the standards for a qualified mortgage.”

The agency has yet to release another rule under Wall Street reform, called the qualified residential mortgage (QRM) rule, which applies to loans originated for inclusion in a mortgage security for sale to investors. That rule’s slated for release in the near future.

By Meg White, REALTOR® Magazine

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