Members of the Structured Finance Association support the Consumer Financial Protection Bureau’s plan to end the “patch” for qualified mortgages, according to a new survey. The SFA released results of a survey of 34 of its members on Monday.
The patch allows mortgages eligible for sale to the government-sponsored enterprises to receive QM status even if the loans have debt-to-income ratios greater than 43%. The patch is scheduled to end by January 2021 and the CFPB is accepting comments until Sept. 16 regarding how to address the issue.
The SFA said its members “overwhelmingly support” ending the QM patch. Many of the firms that participated in the survey invest in non-QMs or originate the loans. The association said the patch grants the GSEs an advantage over the non-agency market in the form of a dynamic means for determining QM status.
The SFA also found that there’s no consensus about how to adjust QM standards if the patch is eliminated. However, the association said industry participants largely agree that the CFPB should issue guidelines to provide more clarity, particularly about income documentation for QMs and non-QMs.
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