ALEXANDRIA, Va. (12/16/13)--Residential mortgage loans will not be subject to safety-and-soundness criticism solely because of their status as Qualified Mortgage or Non-qualified Mortgage loans, the National Credit Union Administration and other federal financial regulators said in guidance released on Friday.
The guidance addresses Ability-to-Repay and Qualified Mortgage standards set to go into effect on Jan. 10. The NCUA, Federal Reserve Board, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency issued a joint statement to clarify safety-and-soundness expectations and Community Reinvestment Act (CRA) considerations related to QM and non-QM loans offered by regulated institutions.
In the release, the agencies said they continue to expect institutions to underwrite residential mortgage loans in a prudent fashion and address key risk areas in residential mortgage lending, including:
- Loan terms;
- Borrower qualification standards;
- Loan-to-value limits;
- Documentation requirements; and
- Portfolio- and risk-management practices.
These standards apply regardless of whether a residential mortgage loan is a QM or non-QM loan, they said.
Agencies responsible for conducting CRA evaluations do not anticipate that financial institutions' decision to originate only Qualified Mortgages, absent other factors, would adversely affect their CRA evaluations.
For the full guidance, use the resource link.