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Friday, November 1, 2013

Extend Safe Harbor to All FHA QMs, ABA Urges

ABA commended the Department of Housing and Urban Development’s proposed standards for Qualified Mortgages that are insured by the Federal Housing Administration. The association also suggested several changes and clarifications.

HUD proposed two categories for federally insured QMs: a safe harbor QM and a rebuttable presumption QM, which it intended to align largely with the QM guidelines established by the CFPB. However, HUD’s proposed standard has several key differences with the CFPB’s standard, including a different points-and-fees trigger and a different rebuttable presumption standard. The rule is also unclear on whether the FHA will insure non-QM loans.

ABA urged HUD to eliminate interest rate distinctions and provide safe harbor to all FHA loans that meet HUD’s QM standard.

ABA also recommended that HUD provide a means for curing loans for which points and fees were miscalculated and offer clarity about how to adjust the QM threshold based on mortgage insurance premium rates.

Read the letter.

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