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CBA Comment Letter to HUD regarding QM Definitions
Dear Sir or Madam:
The Consumer Bankers Association (CBA) appreciates the opportunity to submit comments in response to the proposed rule that would determine which loans would be defined as a qualified mortgage (QM) for single family mortgages insured and guaranteed by the Department of Housing and Urban Development (HUD). Under the Dodd–Frank Wall Street Reform and Consumer Protection Act, HUD and other agencies are permitted to prescribe regulations to define the loans these agencies insure, guarantee, or administer that would qualify as a QM loan, which may differ from the definition outlined in the final rules issued by the Consumer Financial Protection Bureau (CFPB) this past January.
Summary of CBA’s Comments
- The threshold for determining which loans receive the safe harbor liability protection is too complex. Since nearly all HUD insured or guaranteed loans will qualify for the safe harbor, we recommend safe harbor protections for all loans qualifying under the HUD QM rule. Otherwise, the threshold should be fixed and not fluctuate based on changes to the annual mortgage insurance premium (MIP).
- The rebuttable presumption standard outlined in the proposal raises a number of concerns. Those include how to apply the points and fees threshold, the status of loans that lose the HUD insurance or guarantee, and how the current HUD requirements apply to the borrower’s ability to prove the lender did not make a reasonable and good faith determination of repayment ability at the time the loan was made.
- HUD must work with the CFPB on a permanent solution to the issue of whether interest charged until the end of the month for FHA loans would be considered a prepayment penalty if the loan payoff occurs prior to the end of that month.
To read the full Comment Letter, download the PDF.