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Tuesday, July 17, 2012

House Members Urge CFPB to Structure QM as Strong Legal Safe Harbor

House Financial Institutions Subcommittee Chairman Shelley Moore Capito, Rep. Brad Sherman, and 104 other House members yesterday urged the CFPB to structure the “qualified mortgage”—or QM—designation under the pending ability-to-repay rule as a strong legal safe harbor.
We believe that the final rule must structure the QM as a strong legal safe harbor, not a rebuttable presumption.

Both could still be challenged in court. However, as the Federal Reserve correctly stated … the ‘drawback of treating a ‘qualified mortgage’ as providing a presumption of compliance is that it provides little legal certainty for the creditor, and thus little incentive to make a ‘qualified mortgage,’ which limits loan fees and features.
The lawmakers also noted that Cordray emphasized in congressional testimony that it’s important that the CFPB create bright lines for a QM safe harbor so there won’t be a lot of litigation that will send the issue into the courts.
We agree … that this is not an issue that should be settled by the courts. Therefore, we urge the CFPB to craft a safe harbor that strikes the right balance between protecting consumers from poorly underwritten mortgages while ensuring they have access to safe and affordable mortgage products. The ability to repay rule and its QM definition will define the mortgage market for years to come.
Read the letter.
Read the list of signees.

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