Joint Letter to CFPB on the Proposed Qualified Mortgage Rule

The Honorable Kathleen L. Kraninger
Director
Consumer Financial Protection Bureau
1700 G Street NW
Washington, DC 20552

Dear Director Kraninger:

The undersigned organizations write to the Consumer Financial Protection Bureau (“CFPB” or “Bureau”) regarding its Notice of Proposed Rulemaking (“NPR”) on changes to the General Qualified Mortgage (“QM”) definition as part of the Bureau’s Ability-To-Repay/Qualified Mortgage (“ATR/QM”) Rule. Our organizations represent a diverse set of housing finance stakeholders, including consumer groups, lenders, real estate professionals, civil rights organizations, and mortgage insurers, and we appreciate the opportunity to share our collective perspectives on this important rulemaking. There are four key areas of the regulation in which we request the Bureau’s consideration: (a) no presumption or inferences relating to fair housing/fair lending, (b) an increase in the Safe Harbor rate spread threshold, (c) an increase to the overall QM cap, and (d) an alternative treatment for short-reset adjustable-rate mortgages (“ARMs”).

We will address each of these proposed changes, but first would like to emphasize the importance of the collaborative work of this group. Our organizations advocate for regulations that promote access to affordable financing, effective consumer protections, and sustainable homeownership. Most of the signatories to this letter agree with your decision to remove from the QM definition the fixed debt-to-income (“DTI”) ratio requirement for prime and near-prime loans, and all agree that, upon removing a stand-alone DTI ratio, the rule could be enhanced through a few additional modest changes. Thus revised, the new approach to QM will prevent disruption resulting from the expiration of the temporary Government-Sponsored Enterprise (“GSE”) Patch. It also will help preserve access to credit and assist in permitting fair competition and innovation in the mortgage finance industry.

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