House subcommittee members express concern of CFPB’s QM rule on credit access

cfpbMembers of the House Subcommittee on Financial Institutions and Consumer Credit expressed concern on Tuesday that the CFPB’s qualified mortgage rule will reduce qualified homeowners’ access to credit.

The QM—or ability-to-repay rule—mandated under Dodd-Frank requires lenders to determine a borrower’s ability to meet their financial obligations for certain types of higher-priced mortgages.

Under the rule, a consumer’s debt-to-income rule cannot exceed 43 percent of the consumer’s total monthly income. The rule also requires creditors to retain evidence of compliance with the rule for three years after an applicable loan is originated.

Many financial institutions have already said they would cut back on extending certain mortgages as a result of the rule, and the rule could further reduce access to credit.

“My main concern with the QM rule is that the people who do not fit the one-size-fits all criteria for QM loans will not be able to access mortgage credit,” Subcommittee Chairman Shelley Moore Capito said.  “Despite the CFPB’s claims that lenders will issue non-QM mortgages, my conversations with lenders lead me to believe that few, if any, will be willing to issue these types of mortgages.”

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