WASHINGTON — NCUA and the banking regulators said Tuesday lenders that decide to only offer so-called Qualified Mortgages under new lending rules will not run afoul of the anti-discriminatory provisions of the Equal Credit Opportunity Act and its implementing regulation, known as Reg B.
The five agencies, including the FDIC, Federal Reserve, Office of Comptroller of the Currency and Consumer Financial Protection Bureau, said in new guidance, that they do not anticipate that a creditor's decision to offer only Qualified Mortgages would--absent other factors--elevate a supervised institution's fair lending risk.
The CFPB's Ability-to-Repay Rule, which determines which mortgages are qualified to be sold on the secondary market, implements provisions of the Dodd-Frank Wall Act that require creditors to make a reasonable, good-faith determination that a consumer has the ability to repay a mortgage loan before extending credit.
Lenders are presumed to have complied with the Ability-to-Repay Rule if they issue Qualified Mortgages, which must satisfy requirements that prohibit or limit risky features that harmed consumers in the recent crisis. Some lenders, noted the regulators, may decide to restrict their mortgage lending only to loans that are purchasable on the secondary market, thus restricting credit to certain segments.
The ECOA makes it illegal for a creditor to discriminate in any aspect of a credit transaction based on characteristics including race, religion, marital status, color, national origin, sex and age.
The regulators noted the decisions creditors will make about product offerings in response to the Ability-to-Repay Rule are similar to decisions creditors have made with regard to other significant regulatory changes affecting particular types of loans. The guidance counsels that creditors should continue to evaluate fair lending risk as they would for other types of product selections, including by carefully monitoring policies and practices and implementing effective compliance management systems.
The regulators said the same principles apply in determining compliance with the Fair Housing Act and its implementing regulation.
