ICBA filed a comment letter
on the Consumer Financial Protection Bureau’s Advanced Notice of Proposed Rulemaking to allow a policy exempting Fannie Mae and Freddie Mac mortgage loans from the bureau’s Qualified Mortgage rule to expire.
ICBA cautioned the bureau to work with stakeholders on any plans to remove the “GSE Patch” given its importance in obtaining QM status and legal protections for community banks and its potential impact on the mortgage market and the availability of credit. ICBA also urged the CFPB to undertake a detailed study to determine the extent of these impacts, delaying the expiration of the GSE patch as long as necessary to ease the transition for stakeholders.
The “GSE Patch” allows creditors that make loans eligible for guarantee or purchase by Fannie and Freddie to achieve QM safe harbor status even if the loans exceed the 43 percent debt-to-income ratio requirement under the general QM loan definition.
ICBA urged the bureau to retain the DTI ratio metric in some form as a measure of ability to repay, while suggesting some changes to the DTI, including a range of percentages that would denote a QM safe harbor designation, changes to the documentation requirements in Appendix Q, and the use of compensating factors when determining borrowers’ ability to repay their loan.
ICBA also asked for further clarification and guidance regarding certain aspects of the QM provision for community bank portfolio lenders as part of S.2155.