Mortgage Bankers: Changes Must Be Made to QM Rule

While the Consumer Financial Protection Bureau’s (CFPB) qualified mortgage (QM) rule has been long discussed among the mortgage industry, some are calling for further clarification.

Specifically, in regards to the calculation of points and fees under the ability to repay rule. 

In response to a request for comments, the American Bankers Association (ABA) submitted two letters to the CFPB, suggesting expanded definitions of qualified mortgages. 

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The first, written by ABA Executive Vice President Robert R. Davis, applauded CFPB’s proposals, as the agency’s ability-to-repay rule “establishes a QM safe harbor which will broadly serve borrowers and lenders all for most loans, ensuring that fair, reasonable and affordable credit remains available.”

The second letter addressed portions of the proposal related to the calculation of points and fees, as the formula presented in the final rule is “subject to misinterpretation and misapplication.”

“ABA respectfully requests that the Bureau simplify the process of calculating points and fees by publishing a schedule of typical fees that are charged in real estate transactions, and identify which fees and charges are included, and which are excluded,” wrote Davis.

The Mortgage Bankers Association (MBA) also expressed concerns on the issue of points and fees.

“While MBA prefers much of the Bureau’s proposed commentary in this concurrent proposal to the approach taken to these fees in the final rule, MBA believes additional changes and guidance would better serve consumers,” wrote MBA President and CEO David Stevens.

The proposal would add two comments and potential one of two others to its commentary regarding the rules on inclusion of mortgage originator compensation in the points and fees calculation. 

MBA’s comments include the exemption for consumer paid mortgage broker/brokerage compensation. This would clarify that a payment from a consumer to a broker need not be counted toward the points and fees twice because it is both part of the finance charge and loan originator compensation, according to MBA. 

MBA’s second comment calls for the exemption for mortgage broker compensation to mortgage broker employees, to make it clear that a creditor need not include payments by a mortgage broker to individual loan originator employees in the calculation of points and fees.  

“MBA reiterates its position in earlier letters that the CFPB’s work in ensuring sound implementation will be crucial to protecting consumers under these rules,” wrote Stevens.

Read ABA’s first and second letters.  

Read MBA’s letter.  

Written by Jason Oliva

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