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Ahead of today's Senate Banking Committee hearing with CFPB Director Kathy Kraninger to review the bureau's semi-annual report, NAFCU Vice President of Legislative Affairs Brad Thaler sent a letter to the committee suggesting areas where NAFCU believes the structure and operations of the CFPB could be enhanced.

Specifically, Thaler highlighted NAFCU’s position on the CFPB’s ongoing rulemaking to revise the definition of qualified mortgage (QM) in light of the scheduled expiration of the government sponsored enterprise (GSE) patch. NAFCU has previously met with representatives at the CFPB to discuss the GSE patch and, in January, NAFCU signed on to a joint trades letter calling for the continued use of a modified debt-to-income ratio in conjunction with certain compensating factors, which could be used in the underwriting process and supporting significant changes to Appendix Q.

In response to the CFPB's advance notice of proposed rulemaking to revise the General QM definition in light of the possible Ability to Repay/QM patch expiration, NAFCU sent a comment letter to the CFPB urging the adoption of viable alternatives that allow credit unions “the same protections and benefits, including access to the secondary market, and the ability to provide credit for their members" if the CFPB decides not to extend the patch.

“In NAFCU’s comments on the rulemaking, we emphasized that the GSE Patch has been a key factor in credit unions’ ability to lend to members of their communities, especially those of low- and moderate-income, to help them achieve homeownership,” Thaler noted in the letter sent ahead of today's hearing. “We asked that the CFPB grant an extension of the GSE Patch until revisions to the QM definition are finalized to alleviate market disruptions.

“Above all, we think maintaining access to affordable and sustainable mortgage credit should be a key objective of this rulemaking, and we ask the Committee to help enforce this message to the CFPB,” he added.

Additionally, Thaler reiterated NAFCU’s position that the bureau's leadership structure should be reformed to a commission-based model to ensure transparency and accountability. Last week, House Financial Services Committee Member Blaine Luetkemeyer, R-Mo., introduced NAFCU-supported legislation that would do so.

“[A] five-person commission leadership structure would provide consumers and regulated institutions alike with more continuity in policymaking over the course of time,” Thaler concluded. “Given the recent legal challenge to the CFPB in Seila Law before the U.S. Supreme Court, we believe it is an optimum time for Congress to consider moving the CFPB leadership structure to a bipartisan commission.”

Read Thaler’s full letter. The hearing is set to begin at 10 a.m. Eastern.