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NAFCU seeks CU input on CFPB QM proposals
NAFCU is currently seeking comment from member credit unions on the CFPB's notice of proposed rulemaking (NPRM) earlier this month regarding the definition of a general qualified mortgage (QM) under the Truth in Lending Act (TILA). The association provided section-by-section analysis of the proposed rule in a NAFCU Regulatory Alert sent yesterday, as well as a second Regulatory Alert to brief credit unions on the extension of the Government-Sponsored Enterprises Patch (GSE) QM Patch sunset date.
In the first Regulatory Alert, NAFCU highlighted that the NPRM seeks to amend the QM definition in Regulation Z to replace the debt to income (DTI) limit by removing the current 43 percent threshold and replacing it with a price-based threshold.
Under the proposal, NAFCU noted, a loan would meet the QM definition only if the annual percentage rate (APR) exceeds the average prime offer rate (APOR) for a comparable transaction by less than 2.0 bps. The proposal retains the distinction between a safe harbor and rebuttable presumption QM loan. Under the proposal, certain first-lien transactions would be deemed safe harbor QMs if the APOR is less than 1.5 bps, and rebuttable presumption QMs if the APOR is less than 2.0 bps.
While the proposal removes Appendix Q, lenders are still required to consider the borrower's income, assets, and DTI ratio. Additionally, the proposal provides a higher threshold for loans with smaller loan amounts and subordinate-lien transactions.
Comments on the proposed rule are due to NAFCU Sept. 7; Comments are due to the CFPB Sept. 8.
The second Regulatory Alert highlighted the extension of GSE QM Patch's sunset date until the amendments to the general QM loan definition take effect and how the extension would impact credit unions.
Comments on the extension of the sunset date are due to NAFCU Aug. 9; Comments to the CFPB are due Aug. 10.