Consumer Financial Protection Bureau Updates Mortgage Rules

New Proposed CFPB Regulations

The Consumer Financial Protection Bureau (CFPB) has recently announced that is proposing changes to its regulations that determine which loans are defined as “qualified mortgages,” or QMs. The proposed amendment will make it easier for loans to become QMs, as it allows lenders who exceed the limit on points to refund the consumer after consummation of the loan.

The financial services industry has voiced concerns about QM qualifications since January, when the current policies were put into place. Although the CFPB considers the changes “minor,” industry professionals said the adjustments could have a major impact. It also illustrates the CFPB’s willingness to listen to issues lenders face with changes in legislation.

“This shows that the bureau is recognizing these difficulties and are willing to inject some common sense solution to existing problems,” said Rod Alba, vice president of mortgage finance at the American Bankers Association to National Mortgage News. “This is an excellent first step in clarifying regulation, or at least giving banks some certainty when they’re trying to abide by the rules…and I think consumers will benefit too by not having a very confused legal structure that prevents banks from making loans.”

The changes will also add flexibility for nonprofit lenders, as it makes it easier for associated nonprofit lenders to meet the “small servicer” exemption within the CFPB’s mortgage servicing rule. According to the article, larger nonprofits, like Habitat for Humanity, can still offer interest-free loans even if they don’t meet the current exemption of making less than 200 mortgages a year.

Some lenders may have to make adjustments to their process to capitalize on the opportunities created by these changes, and custom software development can help financial institutions stay on top of future changes and make informed decisions.