WASHINGTON Two Consumer Financial Protection Bureau officials testified before the House Financial Institutions and Consumer Credit Subcommittee here yesterday about the Qualified Mortgage rule the regulator has put together.
The QM rule, along with many other regulations and proposals, has led some credit unions to indicate they plan to exit the mortgage-lending business.
CFPB Assistant Director for Mortgage Markets Peter Carroll and Assistant Director for Regulations Kelly Thompson told the panel that in promulgating that rule, the bureau sought to curb irresponsible mortgage underwriting by requiring creditors to make a “reasonable, good-faith determination” that a consumer has the ability to repay a given mortgage. But they also noted that the credit market remains so constrained at this point, they tried to balance the need to ensure against those previous irresponsible underwriting practices with a need to encourage creditors to continue providing responsible loans to consumers.
Republican members of the subcommittee expressed concerns that the rule, which was mandated by the same actDodd-Frank Act that created the CFPB, has already driven banks and credit unions to pull back on extending mortgage credit, and, indeed, mortgage lenders naturally tightened underwriting standards in response to the financial crisis without a regulator telling them of the need to do so.
“My main concern with the QM rule is that the people who do not fit the one-size-fits-all criteria for QM loans will not be able to access mortgage credit,” said Subcommittee Chairman Shelley Moore Capito (R-WV). “Despite the CFPB’s claims that lenders will issue non-QM mortgages, my conversations with lenders lead me to believe that few, if any, will be willing to issue these types of mortgages,” Capito added.
