FPB Encourages Credit Unions to Write Non-QM Mortgages

by Credit Union Association of Rhode Island

Credit unions should continue to feel free to write non-qualified mortgage loans, as long as those loans are supported by strong underwriting, Consumer Financial Protection Bureau Director Richard Cordray said recently.

Cordray made his remarks before a National Association of Realtors gathering. In his remarks, Cordray said “lenders that have long upheld strong underwriting standards have little to fear” from the CFPB’s ability to repay regulations.

The CFPB issued standards to define a “qualified mortgage” under the agency’s “ability to repay” rules in January. The rule amended Regulation Z, which implements the Truth in Lending Act, to require creditors to make a reasonable, good faith determination of a consumer’s ability to repay any consumer credit transaction secured by a dwelling (excluding an open-end credit plan, timeshare plan, reverse mortgage, or temporary loan). It also establishes certain protections from liability under this requirement for “qualified mortgages.”

“These qualified mortgages cover the vast majority of loans made in today’s market, but they are by no means all of the mortgage market. This point is quite important, and it should not be misunderstood,” Cordray said.

continue reading »