WASHINGTON (10/5/13)--What factors should the U.S. Department of Housing and Urban Development (HUD) take into consideration as it sets points and fees limits for its pending qualified mortgage (QM) definition? Credit unions can take on this and other questions in a new Credit Union National Association comment call.
HUD is required under the Dodd-Frank Act to issue its own qualified mortgage rule, separate from the one issued earlier this year by the Consumer Financial Protection Bureau (CFPB). Once finalized, HUD's WM rule will replace the CFPB's QM definition for Federal Housing Administration (FHA) loans or certain other HUD insured loans. HUD expects to finalize and have its QM rule become effective on Jan. 10, at the same time as the CFPB's QM rule takes effect.
The HUD definition would be similar to the CFPB definition, with some distinct differences. For instance, HUD's proposed rule does not have a debt-to-income ratio requirement.
HUD's proposed rule would:
Require FHA streamlined refinances to comply with the rule;
Modify the CFPB's rebuttable presumption standard to clarify that a presumption is rebutted if the lender does not meet the underwriting requirements applicable to the transaction;
Maintain the existing regulatory structure for FHA-insured single-family mortgage programs for purposes of defining qualified mortgages, but augment these programs with certain features;
Define all FHA-insured single-family mortgages to be qualified mortgages, except reverse mortgages insured under HUD's Home Equity Conversion Mortgage (HECM) program; and
Incorporate safe harbor and rebuttable presumption standards into its own definition of qualified mortgage.
HUD is seeking comment from lenders participating in its programs on any issues specific to HUD's mortgage insurance and loan guarantee programs. Many of these issues are addressed in the CUNA comment call.
Other topics addressed in the comment call include:
Whether lenders participating in HUD's mortgage insurance and loan guarantee programs would lower the annual percentage rate relative to the average prime offer rate; and
Whether lenders would always opt for the safe harbor QM rule, and never make a rebuttable presumption QM, and what views credit unions have on the effect that this incentive may have on lenders, borrowers and the broader economy.
CUNA is accepting comments until Oct. 15. Comments are due to HUD by Oct. 30.
For the full comment call, use the resource link.