Regulators See No Fair Lending Risk in QM

green-lightThis is a good move by these 5 agencies. It would be nice if we had more of this from the bureaucracies. For a more detailed look at this subject please read the article below.

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Five federal agencies issued a statement Tuesday assuring creditors that they do not run the risk of being found in violation of fair lending laws should they choose to only originate “qualified mortgages” (QM) as defined earlier in the year.

The Consumer Financial Protection Bureau (CFPB), one of the five issuers of Tuesday’s release, handed down in January a number of guidelines for lenders to follow in order for their loans to be classified as QM (and thus “safe” should legal action arise). A major provision of those guidelines is the Ability-to-Repay (ATR) rule, which requires creditors “to make a reasonable, good faith determination that a consumer has the ability to repay a mortgage loan before extending the consumer credit.”

In response to CFPB’s rulemaking, some bankers have indicated they might limit their offerings to only QM products as the transition is made—and many are concerned as a result that their operations may run counter to the guidelines outlined in the Equal Credit and Opportunity Act (ECOA), implemented by the Federal Reserve’s Regulation B.

However, those fears are unfounded, regulators say.

“In the agencies’ view, the requirements of the Ability-to-Repay rule and ECOA are compatible. ECOA and Regulation B promote creditors acting on the basis of their legitimate business needs,” the interagency release reads. “Viewed in this context, and for the reasons described below, the agencies 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.”

To read the complete article please use the link below.

No Fair Lending Risk

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