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ICBA Encouraged by CFPB “Qualified Mortgage” Rule

Safe Harbor, Balloon-Payment Provisions Will Help Keep Community Banks Lending

Washington, D.C. (Jan. 10, 2013)—The Independent Community Bankers of America (ICBA) today said it is encouraged that the Consumer Financial Protection Bureau’s (CFPB) final rule on consumers’ ability to repay mortgage loans includes ICBA-advocated accommodations for community banks. Provisions structuring the “qualified mortgage” standard as a legal safe harbor and treating certain balloon-payment loans as qualified mortgages will help Main Street lenders continue providing mortgage credit to meet the needs of their customers and communities.

“ICBA and the nation’s community bankers have been strong advocates for tailored rules that will address the problem actors in the mortgage industry while not inhibiting community banks’ ability to provide mortgages to their customers,” ICBA President and CEO Camden R. Fine said. “Excessively rigid rules would threaten to force community banks out of the mortgage market, making it harder for Main Street consumers to get a home loan and slowing the nation’s housing recovery. ICBA appreciates CFPB’s recognition of community banks as common-sense, relationship lenders that help their communities thrive.”

The CFPB’s final rule, which takes effect Jan. 10, 2014, implements laws requiring mortgage lenders to consider consumers’ ability to repay home loans before extending them credit. Included in the rule is a definition of “qualified mortgage” loans, which are entitled to a presumption that the creditor making the loan satisfied the ability-to-repay requirements.

Among its provisions, the rule provides a safe harbor for loans that satisfy the definition of a qualified mortgage and are not deemed to be “higher-priced” loans, which will help avoid unnecessary litigation. Further, the rule treats balloon-payment loans as qualified mortgages if they are originated and held in portfolio by small creditors operating predominantly in rural or underserved areas.

Importantly, the CFPB is also seeking comment on modifications to the final rule that would extend the safe harbor, qualified mortgage designation to additional loans originated and held in portfolio by community banks with less than $2 billion in assets.

ICBA has led the way on these issues, repeatedly encouraging the CFPB to structure the qualified mortgage standard as a legal safe harbor with clear, well-defined standards. ICBA also has worked with the CFPB to include community bank mortgage loans held in portfolio under the qualified mortgage definition.

The association looks forward to continuing to work with the CFPB to ensure community banker concerns with this and other rulemakings are fully addressed.

About ICBA
The Independent Community Bankers of America®, the nation’s voice for more than 7,000 community banks of all sizes and charter types, is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education and high-quality products and services. For more information, visit www.icba.org.

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