House holds another hearing on CFPB ability to repay/QM rule


The House Financial Services Committee’s Subcommittee on Financial Institutions and Consumer Credit held its second hearing yesterday focused on the CFPB’s ability to repay/qualified mortgage rule. At the first hearing in May, the only witnesses were two CFPB officials. The witnesses at yesterday’s hearing, entitled “Examining How the Dodd-Frank Act Hampers Home Ownership,” consisted of representatives of state regulators, consumers and industry.

The witnesses representing industry included James C. Gardill, Chairman of the Board, WesBanco, Inc., on behalf of the American Bankers Association, and Debra W. Still, Chairman of the Mortgage Bankers Association. In their testimony, Mr. Gardill and Ms. Still sounded a common theme: that the QM rule will substantially limit mortgage lending because lenders will not want to face the risks associated with making loans outside the QM standard.

In his testimony, Mr. Gardill discussed the complexity of the QM rule to support the ABA’s plea for a 12 month extension of the implementation date to January 2015.

In her testimony, Ms. Still asked Committee members to urge the CFPB to change the QM rule by raising the small loan limit for loans that can have more than 3 percent in points and fees and still qualify as QMs from the current $100,000 limit to $200,000. She also repeated the MBA’s request that the CFPB amend the definition of points and fees to exclude affiliated title fees and clarify that loan originator compensation from lenders to brokers and escrowed amounts be excluded from the calculation for purposes of applying the QM 3 percent points and fees limit. While noting that the MBA believes the CFPB can make these revisions under existing law, she also voiced the MBA’s support for H.R. 1077, the Consumer Mortgage Choice Act, which would amend the Dodd-Frank Act’s ability to repay/QM provisions to expressly exclude these items from the 3 percent QM cap.

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