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The CFPB’s Revisions to the Qualified Mortgage Rules (the “GSE Patch”)

This week, the Consumer Financial Protection Bureau (CFPB) announced two notices of proposed rulemaking (NPRMs) extending temporary Qualified Mortgage (QM) rules for loans guaranteed by Fannie Mae and Freddie Mac (the “GSE Patch”) and proposing a price-based general QM loan definition to replace the current debt-to-income-based approach.

Jesse Van Tol, CEO of the National Community Reinvestment Coalition, provided the following statement:

“We have supported a longer term extension of the so-called “GSE patch” – the agency’s temporary rules that have granted QM status to loans guaranteed by Fannie Mae and Freddie Mac. Without the GSE patch, even more low- and moderate-income (LMI) families and minority borrowers would be locked out of homeownership by the hard debt-to-income standard under the general QM rules.  

“A price-based alternative, combined with existing statutory provisions and the additional regulatory safeguards outlined in the CFPB’s proposed rule, has the potential to improve access for LMI and minority borrowers, but it is critical to consider this proposal within the context of other federal policy changes affecting the nation’s housing finance system and the broader impacts of COVID-19 on LMI households and credit standards throughout the mortgage market. FHFA’s proposed capital requirements, for example, will also affect the mortgage market, access and affordability of mortgages for LMI and minority home buyers.    

“We look forward to supporting an extension of the GSE Patch and reviewing the CFPB’s price-based alternative within this broader context to ensure that the nation’s housing finance system provides more and not less access to homeownership, which continues to be the key wealth-building vehicle for LMI and minority families.”

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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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