On Monday, June 3, 2013, NAR President Gary Thomas submitted comments to the Consumer Financial Protection Bureau (CFPB) on further proposed revisions to the Ability-to-Repay or Qualified Mortgage (QM) rule. These changes provide more flexibility for lenders to qualify borrowers under the QM safe harbor standard which provides certain protections from liability in connection with the ability to repay determination. NAR is supportive of the changes the CFPB has proposed in response to lender concerns and provided specific comments on several of the QM changes:
- If a lender is forced to repurchase a loan for reasons unrelated to the borrower’s ability to repay the loan, the loan should still qualify for QM safe harbor status.
- Lenders should be able to originate QM safe harbor loans to separate written standards agreed to between the lender and the GSEs; however, these agreements should be made public to allow other lenders to assess the conditions of the agreement in order to seek equivalent treatment. This approach is intended to balance flexibility of existing agreements without creating competitive advantages for any one bank.
- NAR supports the proposed changes to “Appendix Q” that will only require that lenders confirm current employment rather than likelihood of continuing employment.
- Finally, NAR requested a number of clarifications on the defined status, calculation of commission income and earnings trends with respect to self-employed individuals.
The CFPB has already released amendments to the QM rule and will continue evaluating aspects of the rule to ensure the continued availability of mortgage credit to consumers.