WASHINGTON, D.C. – This week, the Consumer Financial Protection Bureau (CFPB) released two Notices of Proposed Rulemaking (NPRMs). The proposals would extend the temporary Government-Sponsored Enterprises Patch (GSE Patch) and amend the definition of “qualified mortgage” (QM) by removing the debt-to-income limit and replacing it with a price-based approach. The QM rule was created under the ability to repay provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
Center for Responsible Lending (CRL) President Mike Calhoun released the following statement:
Black and Latino consumers continue to lag in today’s mortgage market, which is disturbing considering that interest rates are at historic lows. This announcement from the CFPB provides helpful market certainty that the QM Patch will be extended through at least April 1, 2021. It also advises that CFPB is considering a price-based approach to QM. A price-based approach permits lenders to underwrite borrowers holistically, including through considering their debt-to-income ratio and residual income, while not denying borrowers access to credit based on a single variable. The CFPB can get the details of a price-based approach right in its final rule to ensure that QM strikes the correct balance between access for all creditworthy borrowers and sound risk management by lenders.
Residential segregation and discriminatory federal housing policy are at the root of today’s social injustices that the people led protests are calling to fix. Removing obstacles in the mortgage finance system to lending opportunities is part of the solution. The other part is strong enforcement of our nation’s fair lending protections. The CFPB must use all the tools in its toolbox to make mortgage credit fairer.
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