Joint Comment: Final Qualified Mortgage (QM) Rule Must Effectively Protect Consumers and Promote Access to Responsible Mortgage Credit


Thank you for the opportunity to comment on the Consumer Financial Protection Bureau’s (CFPB’s) qualified mortgage (QM) proposed rule. Given CFPB’s decision to end the GSE patch, we believe that a price-based approach is an appropriate and effective method to determine QM status. However, additional safeguards are necessary to ensure that the final rule effectively protects consumers and promotes access to responsible mortgage credit.

In finalizing its rule, CFPB should ensure borrower protections for four key issues: fair lending, pricing caps, short-reset adjustable rate mortgages (ARMs), and “consider and verify.” Our comment also addresses CFPB’s seasoning proposal and small balance loans.

We recommend that CFPB do the following:

  1. Protect against pricing discrimination by ensuring that lenders engaged in price discrimination cannot take advantage of the safe harbor;
  2. Adopt a price-based approach to QM rather than a DTI- or hybrid DTI/price-based approach;
  3. Raise the safe harbor threshold to 2% over APOR;
  4. Raise the overall QM cap for rebuttable presumption loans to 3% over APOR;
  5. Ensure that borrowers are protected from excessive payment shock in short-reset ARMs consistent with the QM statute;
  6. Clarify the requirement that lenders consider and verify debts and income and consider debt-to-income (DTI) or residual income by ensuring meaningful ability to repay (ATR) analysis under the safe harbor;
  7. Refrain from adopting a seasoning approach to turn non-QM or rebuttable presumption loans into safe harbor loans. If CFPB adopts the seasoning approach, ensure that none of the safeguards CFPB included in the proposed rule are weakened; and
  8. Engage in further data analysis for small loans, disaggregating chattel and real estate-secured loans.

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

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