Federal Banking Agencies Issue Interagency Statement on Supervisory Approach to Qualified Mortgage Loans

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The FDIC, OCC, NCUA and FRB issued an interagency statement on the supervisory approach to originating qualified mortgages under the CFPB’s ability-to-repay and qualified mortgage rule finalized in January 2013 and subsequently amended (see January 10, 2013 Alert). The statement is intended to clarify supervisory expectations under the Community Reinvestment Act and safety-and-soundness requirements for supervised institutions. Under the CFPB’s rule, there is a presumption of compliance with the ability-to-repay requirements for loans that meet the definition of a “qualified mortgage.” The agencies noted that supervised institutions that originate both qualified mortgages and loans that do not meet the definition of qualified mortgage based on “business strategies and risk appetites” will not be subject to safety-and-soundness criticism based solely on the loan’s status as a qualified mortgage or a non-qualified mortgage. Finally, similar to the previous interagency statement on the compatibility of fair lending laws and the ability-to-repay and qualified mortgage rule (see October 29, 2013 Alert), the agencies noted that the CRA and the rules are compatible. The agencies do not believe that an institution’s decision to originate only or predominately qualified mortgages, “absent other factors,” would adversely affect the institution’s CRA evaluations. 

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