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Monday, April 30, 2012

ABA & Trade Groups: Structure ‘Qualified Mortgage’ as Safe Harbor

ABA and a diverse coalition of 22 other trade groups on Friday reiterated to CFPB Director Richard Cordray that the “qualified mortgage” -- or QM -- designation under the pending ability-to-repay rule should be structured as a legal safe harbor with clear, well-defined standards.

In the letter the trade groups said:
Structuring the QM as a safe harbor and focusing litigation and enforcement activity on whether the standards are met is the only means of ensuring that the largest number of borrowers possible will enjoy the safest and most affordable options for sustainable credit available through the QM.
They emphasized that establishing the QM as a “rebuttable presumption” of compliance would markedly lessen the availability and affordability of sustainable consumer mortgages.
[A] rebuttable presumption [could] be overridden by facts or evidence beyond, and completely unrelated to, the [QM’s] requirements … This unpredictability, in a setting where the potential liability for each claim can be extensive, will force lenders to retreat to far more conservative lending standards.
Read the full letter.

ABA president and CEO Frank Keating in a press release regarding the letter stated:
A safe harbor with well-defined standards is the only path to ensure that qualified borrowers have access to affordable credit.

The unpredictability of a rebuttable presumption would create litigation risks too great for most lenders to continue offering mortgages to all qualified borrowers. This collection of housing groups, realtors, banks and credit unions are gravely concerned that a rebuttable presumption would be damaging to credit availability, communities and the housing market.
Read the press release.

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Ahmad Abdullah said...
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