The CFPB’s proposal last month to introduce a limited “cure” provision to the Qualified Mortgage rule would “significantly improve” the rule, ABA said in a comment letter. It would help banks ensure compliance, manage liability, and thus offer consumers lower-cost loans, ABA added, “incentiviz[ing] robust post-consummation quality control and audit procedures in a way that benefits both lenders and borrowers.”
The CFPB’s proposal would allow 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.
ABA urged the bureau to extend the time during which banks can cure errors to 180 days, as 120 days would be too tight a timeframe for banks — especially small community lenders — to review consummated mortgages without dramatically increasing their compliance costs. ABA also urged the bureau to eliminate the good-faith requirement, which it said is duplicative.
The bureau is also seeking 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, and ABA intends to comment on this matter by July 9.
Read the letter.