The CFPB should make it easier for community banks to receive the small creditor Qualified Mortgage exemption, ABA said in a comment letter. It also urged the bureau to create a provision allowing banks to correct errors resulting in a mortgage inadvertently falling below QM standards for debt burden.
While it did not issue a regulatory proposal, the bureau requested comments on additional factors that can qualify a lender for the small creditor QM exemption and on a cure proposal when an intended QM loan exceeds the rule’s 43% debt-to-income limit.
ABA said the current small creditor test is too narrow, “fail[ing] to benefit a wide range of smaller banks with the capacity to offer more community-based financing essential to the markets they serve.” The association recommended limits of up to $10 billion in assets and 2,000 loans per year. It also said a DTI cure mechanism would be useful to banks and beneficial to consumers if appropriately structured.
Read the letter.