Senators question Kraninger on QM proposal, MLA authority

CFPB Director Kathy Kraninger, while testifying before the Senate Banking Committee Tuesday, provided updates on efforts related to amending the definition of a qualified mortgage (QM) and potential expiration of the government-sponsored enterprise (GSE) patch, as well as the bureau’s authority under the Military Lending Act (MLA).

Ahead of the hearing, NAFCU outlined areas where the CFPB could be improved, including reforming its governance structure to a bipartisan commission, and shared credit unions’ position on the QM rule.

The bureau last year issued an advance notice of proposed rulemaking (ANPR) to address the upcoming expiration of the category of loans that obtain QM status due to their eligibility for purchase or guarantee by the GSE patch. The GSE patch is an exemption for loans eligible for purchase by the GSEs from the QM rule’s 43 debt-to-income (DTI) cap; it’s currently set to expire either when the GSEs are removed from conservatorship or on Jan. 10, 2021.

In response to a question from Sen. Thom Tillis, R-N.C., Kraninger said a proposal to amend the rule to move away from the DTI and toward an average prime offer rate (APOR) threshold is expected in May. She also reiterated the bureau’s intention to let the GSE patch expire in 2021 or after a short extension if necessary to facilitate a transition.

 

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