Amendments to the “ability-to-pay” rule announced by the Consumer Financial Protection Bureau Wednesday will allow certain types of lenders more easily meet “qualified mortgage” requirements.
One of the three amendments announced will allow small creditors, those with less than US$ 2bn in assets and originate less than 500 loans annually, to extend the “qualified mortgage” standard for loans that surpass the 43% debt-to-income – a max that will stay in put for other lenders. The lender, however, does have to hold the loan on its balance sheet for 2 years after origination.
A second amendment would allow nonprofits to be exempt from ability-to-repay rules, which is intended to help low- and moderate-income consumers obtain financing.
Some credit unions qualify for non-profit status, so that could facilitate lending for them, said Mary Dunn, senior vice president and deputy general counsel in the Credit Union National Association's (CUNA).
The last amendment would change the loan origination compensation calculation to excluded from the 3% points and fees cap under Dodd-Frank.
This is an overall advantage for the mortgage industry, said Bill Bent, EVP of production at Academy Mortgage.
“It was going to be very difficult and expensive to put systems in place to ensure we were meeting the law if the 3% included LO compensation. The consumer would have paid the cost of this burden through higher pricing.”
The industry is hoping for additional amendments to be made to the ability to pay and qualified mortgage rule ahead of the 1 January enactments, said Dunn. “This is a sign the agency is responding to the industry’s concerns,” she added.