On March 30, 2015, NAR submitted comments to the CFPB on proposed changes to mortgage rules that were finalized in January of 2013. Generally, the proposal modifies QM rule to expand safe harbor exemptions for community banks and those serving rural or underserved areas.
NAR’s comments focus on several key points:
- Need to balance the recognition of the impact that the regulatory environment has had on the ability of community banks to provide mortgage credit with the importance of ascertaining a consumer’s ability-to-repay.
- The proposed amendments recognize that community banks have a long history of a common sense approach to underwriting and offering mortgage credit to borrowers, and that the relationship-lending model is one that should be maintained.
- Any exception to the general rule must be limited and not become the general rule – moderating regulatory burdens for small lenders needs to be balanced with maintaining principles of strong underwriting.
- In addition to the amendments of the definition of rural, the CFPB should include an exemption application process that will guarantee that citizens in rural communities aren’t being left without mortgage options. This process would also help to assure that communities excluded from the rural definition amendments would have an avenue to apply to the CFPB to extend the definition of rural in those inevitable cases where a county may have been inappropriately excluded.