Compliance Blog

Written by Bernadette Clair, Senior Regulatory Compliance Counsel

Supervisory Approach for Qualified and Non-Qualified Mortgage Loans (QM and non-QM). Last week, the NCUA, FDIC, Federal Reserve Board and OCC announced the release of an interagency statement regarding their supervisory approach for QM and non-QM loans.  The statement, intended to guide institutions as they implement the CFPB’s Ability-to-Repay and Qualified Mortgage Rule, clarifies in part that residential mortgage loans will not be subject to safety-and-soundness criticism based solely on their status as QMs or non-QMs.

From the statement:

“Safety-and-Soundness Expectations

The agencies recognize that many institutions are in the process of assessing how to implement the Bureau’s Ability-to-Repay Rule. The agencies emphasize that institutions may originate both QMs and non-QMs, based on their business strategies and risk appetites. Residential mortgage loans will not be subject to safety-and-soundness criticism based solely on their status as QMs or non-QMs.

Regardless of whether residential mortgage loans are QMs or non-QMs, the agencies continue to expect institutions to underwrite residential mortgage loans in a prudent fashion and address key risk areas in their residential mortgage lending, including loan terms, borrower qualification standards, loan-to-value limits, and documentation requirements. Institutions also should apply appropriate portfolio and risk management practices. Institutions should continue to comply with the applicable guidance on residential mortgage lending issued by their respective federal regulators.”

For complete details, the interagency statement is available here.

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Changes to the Definitions of “Funds Transfer” and “Transmittal of Funds.” FinCEN and the Federal Reserve Board recently finalized a rule amending the definitions of "funds transfer" and "transmittal of funds" under regulations implementing the Bank Secrecy Act (BSA). These changes were made in response to Dodd-Frank’s amendments to the Electronic Fund Transfer Act (EFTA), creating new protections for remittance transfers, and were necessary to maintain the current scope of transactions covered by the BSA recordkeeping and travel rules. The final rule adopts the amendments as proposed, and is effective January 3, 2014. For more background on these changes, see our December 17, 2012 blog post.