Richard Cordray: Good Loans Aren’t Necessarily QM Loans

Despite all the new mortgage rules, Consumer Financial Protection Bureau director Richard Cordray continues to try to assure lenders that they should not be afraid of making traditional well-underwritten loans.

The CFPB chief has pointed out in several speeches that originating loans that exhibit strong performance over time should not run afoul of the qualified mortgage rule that goes into effect in January.

“Those lenders that have long upheld strong underwriting standards have little to fear” from the QM ability-to-repay rule, Cordray said at a Washington meeting of the National Association of Realtors.

Many lenders fear they will be exposed to severe litigation risk if they don’t make loans that meet the ability-to-repay standards.

But Cordray noted that community banks and credit unions have traditionally made good loans.

“Nothing about their traditional lending model has changed, and they should continue to offer such mortgages to borrowers whom they evaluate as posing reasonable credit risk—whether or not they meet the criteria to be classified as qualified mortgages,” Cordray said Tuesday.