WASHINGTON — The Consumer Financial Protection Bureau will issue both proposed changes to the “qualified mortgage” rule and a final regulation revising policy on remittances no later than May, the agency’s director said Tuesday.
CFPB Director Kathy Kraninger said both steps will come as part of an ongoing review of agency rules, and show her "commitment under the law to be effective and evidence based” to provide clarity to stakeholders.
The agency's QM regulation requires lenders to verify borrowers' ability to repay and includes protection for a category of loans with certain safe features, including a 43% debt-to-income limit.
But the agency has been clear in its intent to revamp the mortgage underwriting rule. The effect of the DTI cap so far has been limited since loans backed by Fannie Mae and Freddie Mac are exempt under the so-called QM patch. However, that patch is set to expire in 2021 or shortly thereafter, which could result in a sizable chunk of high-DTI loans suddenly being in violation.
Kraninger said the agency will consider an alternative to the 43% DTI limit in a new definition of qualified mortgages.
“The bureau will propose an alternative, such as a pricing threshold, to better ensure that responsible, affordable mortgage credit remains available to consumers,” Kraninger said at a Credit Union National Association conference. “To this end the bureau is working diligently to issue no later than this May a proposed rule seeking comment on these possible amendments.”
Also on the CFPB’s docket is finalizing a plan to expand a safe harbor in the agency’s remittance rule to more financial institutions. In December it proposed a permanent safe harbor for institutions if they provide 500 or fewer remittance transfers a year. Currently, institutions receive a safe harbor if they issue just 100 transfers annually.
Kraninger said the agency will finalize the remittances rulemaking in May.
“This would reduce the burden on over 400 banks and almost 250 credit unions that send a relatively small number of remittances to help their customers,” she said. “Ultimately by allowing the use of estimates in some circumstances and adjusting the threshold for coverage of the rule, our proposal is designed to preserve consumers’ ability to send remittances from their bank accounts or credit union accounts to certain destinations.”
