The Consumer Financial Protection Bureau “wisely” provided qualified mortgage status to loans that are sellable to Fannie Mae and Freddie Mac, according to Debra Still, chairman of the Mortgage Bankers Association.
This “temporary patch” will ensure access to mortgage credit as lenders implement and get used to the QM rule. It would have been a “scary proposition” if the CFPB tied to write its own underwriting manual, she said Wednesday at a Bipartisan Policy Center forum.
However, the GSE underwriting engines are not transparent and the Fannie and Freddie loan limits may be lowered next year, which will reduce the QM space.
“Long term, I would much rather have the CFPB own the underwriting engine than rely on other underwriting engines to define access to credit,” Still said.
At the BPC forum, Still and Michael Calhoun, president of Center for Responsible Lending, agreed that the regulators should not include a downpayment requirement in the qualified residential mortgage rule, which is supposed to protect investors and impose risk retention on MBS issuers that securitize non-QM loans.
Calhoun stressed that the QM rule will rid the market of risky loans and make it safer for borrowers and investors.
At this time, risk retention would only “increase the cost of a mortgage without adding any real protections,” the CRL president said. He noted the regulators can revisit the QRM risk retention issue in a few years if “additional investor protections are needed.”
Still agreed that the regulators should not “hardwire” a downpayment requirement into the QRM rule. The MBA chairman noted that QM loans will be slightly more conservative than the prime loans originated today.
The QM rule is slated to go into effect in January. “It will drive lenders to make only the safest loans that are QM compliant,” she said.