QM Rule Sparks Concerns GSEs May Change Buyback Policies

Concerns are growing that Fannie Mae and Freddie Mac are rethinking their loan buyback policies in light of the qualified mortgage rule that the Consumer Financial Protection Bureau issued last week.

And the National Association of Federal Credit Unions has asked the Federal Housing Finance Agency to step in and ensure that any changes in buyback policies don’t adversely impact credit unions and other small lenders.

“The consequence of such policies, we fear, would create inequity as regards access to the GSEs between the largest mortgage lenders…and credit unions and other smaller lenders,” NAFCU executive vice president Dan Berger says in a letter to the GSE regulator.

The QM rule shields lenders from legal liability if they follow the QM “ability to repay” underwriting standards in the final rule that goes into effect in January 2014. Mortgages approved via the GSE automated underwriting systems are classified as QM loans under the final rule.

NAFCU is concerned that Fannie and Freddie will establish new buyback policies around the new QM rule. For example, the GSEs might require buyback provisions on all non-QM loans, which would restrict the ability of small lenders to offer other mortgage products.

NAFCU is hoping the FHFA will intervene and create a more open debate about buybacks.

“We respectfully request that the FHFA, as both the conservator of and in its oversight and regulatory authority over the GSEs, carefully considers the impact of buyback policies on credit unions and other small lenders,” Berger says in the Jan. 14 letter.