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CUNA trades urge QM clarity in letter to CFPB
WASHINGTON (9/17/12)--The Credit Union National Association (CUNA) and other financial trade groups have urged the Consumer Financial Protection Bureau (CFPB) to broadly define qualified mortgages and provide mortgage lenders with a legal safe harbor from ability-to-repay litigation.

In a recent letter, which was sent Friday to CFPB Director Richard Cordray, CUNA and the groups said the qualified mortgage definition must meet three requirements:

  • Qualified mortgage must be broadly defined to include the vast majority of very high quality loans being originated in today's market;
  • The product, documentation and underwriting requirements must be based on objective, bright line standards; and
  • Lenders and investors must be granted a clearly defined legal safe harbor from ability-to-repay litigation when they originate loans that meet the qualified mortgage standards.
A broad qualified mortgage definition, with bright line standards embedded in a legal safe harbor, "is the only sure means to serve the widest array of qualified borrowers with affordable credit," the letter said. "A safe harbor will result in far more mortgage borrowers obtaining sustainable credit," the letter added.

Under a still-developing CFPB rule, mortgage originators would be required to consider a homebuyer's ability to repay a loan before the loan is offered. The CFPB's ability-to-repay requirements would apply to consumer credit transactions that are secured by a dwelling and be further defined by the agency's definition of a qualified mortgage.

"As the agency works to finalize the rule, which is required to be published by January of next year, we want to ensure credit unions will be able to serve the widest array of qualified member/borrowers as possible," CUNA Deputy General Counsel Mary Dunn said.

The letter was co-signed by the American Bankers Association, the American Financial Services Association, the Consumer Bankers Association, the Community Mortgage Banking Project, the Consumer Mortgage Coalition, the Housing Policy Council of the Financial Services Roundtable, the Independent Community Bankers of America, the Mortgage Bankers Association and the National Association of Federal Credit Unions.

For the full letter, use the resource link.


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