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Thursday, May 1, 2014

CFPB Tweaks Mortgage Rules on QM Errors, Seeks Feedback

The CFPB proposed a few limited changes to its mortgage rules. One change would introduce a “cure” provision to the Qualified Mortgage rule, allowing a lender who intends to originate a QM but that later finds that points and fees exceeded the 3% cap to refund the excess within 120 days and maintain the legal protections afforded to QMs.

Without proposing any particular action, the CFPB requested comment on “whether and how” to provide an opportunity to cure or correct consummated loans that were originated as QMs in good faith but ended up exceeding QM’s 43% debt-to-income ratio limit. The bureau also requested feedback from small creditors on their experience since the rules took effect in January and “how their origination activities have changed in light of the new rules.”

ABA noted that it appreciated the bureau’s efforts to improve the mortgage rules by providing a mechanism to remedy inadvertent errors. Other proposed changes would apply to Section 501(c)(3) nonprofits that originate and service mortgages. Comments on the proposal are due 60 days after it is published in the Federal Register.

Read the CFPB’s proposal.

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