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Monday, January 7, 2013

Keating to NY Times: QM ‘Safe Harbor’ Essential

The CFPB’s “qualified mortgage” standard under its pending ability-to-repay rule must be structured as a legal safe harbor for the good of consumers and the economy, ABA President and CEO Frank Keating said in a letter in Saturday’s New York Times.

Keating’s letter took issue with a recent Times story that characterized a safe harbor as a “significant advantage” for banks.
Consumer protection rules in 2013 will be different from the past. The potential bases for lawsuits will expand significantly, regulatory penalties will increase by multiples, and consumers gain a ‘life of loan’ ability to recoup all payments made, including interest. If lenders are to face such new liabilities, they need clearly written rules and safeguards. The future of mortgage finance hangs in the balance … .
The CFPB is expected to unveil its final qualified mortgage definition, which is part of the CFPB’s rule requiring mortgage lenders to confirm a borrower’s ability to repay a loan, later this month.

Read Keating’s letter.

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