NAMB—The Association of Mortgage Professionals applauds the efforts of the Consumer Financial Protection Bureau (CFPB) to finalize the Ability-to-Repay rules mandated by the Dodd-Frank Act, also known as Qualified Mortgages (QMs). NAMB has, and continues to be, a proponent of ensuring that consumers have an ability to repay mortgage loans.
NAMB applauds the CFPB’s efforts to reach out to the industry for feedback regarding these rules as the Bureau has been tasked with the very difficult job to create a rule to protect consumers from poorly-designed loans, such as pay-option ARMs and no-doc loans. Yet, the CFPB also cannot limit consumer choice by creating an uneven playing field between the “Too Big to Fail” institutions and the thousands of small businesses originating loans today. The primary concern of NAMB with the QM rule surrounds the Dodd-Frank Act’s mandate of a three percent cap on points and fees.
“We believe permanently removing certain loan programs with risky features such as no-doc loans to W-2 borrowers will help the housing market in the long run,” said NAMB Government Affairs Committee Chair John H. P. Hudson. “However, arbitrary caps on points and fees which do not impact a consumer’s ability to repay, without any clear definitions, will ultimately harm consumers by reducing competition, raising borrower costs and promoting the policies of ‘Too Big to Fail’ institutions. The congressional intent of the Ability-to-Repay Rule was not to put the CFPB in a position of picking industry winners and losers.”
NAMB feels that the CFPB’s QM rule can potentially promote a bias against non-creditor mortgage companies. The three percent cap on points and fees not only has the potential to discriminate against small business entities, but it has the potential to limit access to credit for lower loan amount consumers which typically are considered low- to moderate-income consumers.
“Homeownership is the key to wealth generation in this country for many Americans,” said NAMB President Don Frommeyer. “Overly restrictive definitions of the QM could lead to many Americans being forced into a permanent class of renters. NAMB membership works to protect equal access to credit for all consumers, not just those whom can afford to buy more expensive houses.”
The CFPB will be seeking further comment on the QM definitions. NAMB officially calls for the CFPB to convene a small business review panel to study and learn the impact that the QM rule will have on thousands of small business owners, employees and the consumers in areas typically underserved by Too Big to Fail institutions.
“Utilizing the Small Business Regulatory Enforcement Fairness Act (SBREFA) process will help Director Cordray and his staff better understand the impact certain provisions of the QM will have on small businesses and the consumers they serve,” said Hudson.
NAMB officials will continue to review the final QM Rule and will issue further comment.
“Consumers deserve protection from bad mortgage products,” said Frommeyer. “However, the unintended consequences of ‘one size fits all’ regulation will ultimately harm the very people it is meant to protect. In today’s environment of historically low interest rates and an economy finally showing signs of recovery, the CFPB should continue to work with the mortgage industry to ensure that consumers still have availability to affordable credit. NAMB looks forward to working with the CFPB to ensure the rule is fair for all.”