Statement: CFPB’s Proposed Rules on The General QM Loan Definition and Extension of the GSE Patch

June 23, 2020

WASHINGTON — U.S. Mortgage Insurers (USMI) President Lindsey Johnson issued the following statement on the Consumer Financial Protection Bureau’s (CFPB) Notices of Proposed Rulemaking (NPRM) on the general qualified mortgage (QM) definition under the Truth in Lending Act (Regulation Z) and the extension of the government sponsored enterprises (GSEs) Patch:

“USMI appreciates the CFPB assessing what has happened in the marketplace since the general QM loan definition and temporary QM category (“GSE Patch”) were first implemented in 2014. Since then, market participants have originated mortgage loans with far greater diligence to ensure consumers have a reasonable ability-to-repay (ATR) and with more robust underwriting standards that have resulted in a much stronger housing finance system. The GSE Patch has also played a critical role in maintaining credit availability in the conventional market. As takers of first-loss mortgage credit risk with more than six decades of expertise and experience underwriting and actively managing that risk, USMI members understand the need to balance prudent underwriting with a clear and transparent standard that maintains access to affordable and sustainable mortgage finance credit for home-ready borrowers. USMI looks forward to reviewing and submitting comments on both rules.”

In September 2019, USMI submitted comments on the CFPB’s advance NPRM on the QM definition, offering specific recommendations for replacing the current GSE Patch to establish a single transparent and consistent QM definition in a way that balances access to mortgage finance credit and proper underwriting guardrails to ensure consumers’ ATR.

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U.S. Mortgage Insurers (USMI) is dedicated to a housing finance system backed by private capital that enables access to housing finance for borrowers while protecting taxpayers. Mortgage insurance offers an effective way to make mortgage credit available to more people. USMI is ready to help build the future of homeownership. Learn more at www.usmi.org