Those requirements are: the QM must be broadly defined to include the vast majority of very high quality loans originated in today’s market; its 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 QM standards.
We believe a broad definition of QM 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. A legal safe harbor with such standards will reduce the uncertainty associated with QM litigation and ease the need for lenders and investors to establish conservative credit overlays.The associations added that such a safe harbor will permit claims by borrowers when the standards have not been met.
In short, a safe harbor will result in far more mortgage borrowers obtaining sustainable credit than a QM rule with a rebuttable presumption.Read the letter.
For more information on this and other proposals, as well as a timeline for Mortgage regulatory reform, see the ABA Backgrounder, "Mortgage Reform into 2013," available at the ABA Mortgage Solutions page.