Industry groups are urging the Consumer Financial Protection Bureau to initiate a testing program for the new mortgage disclosure forms that will be used for qualified mortgages.
In a letter to the CFPB, four trade groups noted that the qualified mortgage rule creates a safe harbor from litigation. And due to the litigation risk, “very few or no non-QM loans” will be originated once the QM rule goes into effect next January.
Testing the newly merged
In 2008, the Department of Housing and Urban Development finalized new Real Estate Settlement Procedures Act disclosure forms without sufficient testing. It led to widespread confusion and HUD had to delay enforcement for four months, the joint letter says.
“If only a few generic transactions are tested, when the disclosure regulation is finalized, permutations that do not fit the forms will cause problems.”
The American Escrow Association, American Financial Services Association, Consumer Mortgage Coalition and Mortgage Bankers Association signed the letter.
The trade groups also noted that the points and fees on QM loans cannot exceed 3%. “Consideration should be given to testing a form that will allow calculation of the points and fees,” the joint letter says.
