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Wednesday, July 9, 2014

ABA Comments on CFPB Small Creditor QM, DTI Cure Ideas

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.

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