The CFPB is still deciding between the safe harbor and rebuttable presumption approaches to protection for lenders under the pending ability-to-repay rule's “qualified mortgage”–or QM—designation, CFPB Director Richard Cordray told the House Financial Services Committee during a hearing yesterday on the CFPB's semiannual report to Congress.
Cordray—in response to a question from Rep. Michael Grimm (R-N.Y.)—said that "some of the differences in the safe harbor and rebuttable presumption are in some ways overstated, and we are going to try to minimize litigation risk and draw some bright lines," according to press reports. He added that the bureau has not yet taken a position on either approach.
ABA has strongly emphasized to the CFPB many times—including a letter last Friday—that a legal safe harbor approach to qualified mortgages is essential to provide lenders with assurances necessary to originate loans to all creditworthy borrowers.
The association also has stressed that a rebuttable presumption is largely useless to lenders at the pleadings stage, provides only limited protection at summary judgment or trial stages of litigation, and will reduce credit availability.
Read more about the hearing.