CFPB: There Will Likely Be Little Lending Outside of QM

When pressed on the issue of the “qualified mortgage” (QM) definition before members of Congress this week, Consumer Financial Protection Bureau Director Richard Cordray said there would likely be little lending outside of QM.

Speaking before the Committee on Oversight and Government Reform in a hearing titled “Credit Crunch: Is the CFPB Restricting Consumer Access to Credit?” Cordray outlined his view on the future of regulation.

“Can the pendulum swing too far? Can [regulators] overreact and compound the problem? I think that is always a possibility,” he said. “[That’s why] it’s important to be thoughtful about what we are doing.”

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When pressed on the issue of QM, according to a report from the American Bankers Association, Cordray responded that it will be difficult to determine the long-term effects of the rule, however, because it will encompass the vast majority of lending in the near term, it is likely to be more inclusive in its definition.

Home Equity Conversion Mortgages (HECMs) do not fall under the QM definition, but the National Reverse Mortgage Lenders Association has requested that the CFPB created a definition of qualified mortgage under its ability to repay rule to assure that HECM reverse mortgages have an opportunity to qualify for an exemption from the risk retention requirements.

Read the report from the ABA.

Written by Elizabeth Ecker

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