“In our view, the primary risk associated with some lenders being less than fully prepared for QM could be temporary loan production delays,” the consulting firm adds.
Loan broker Anne James, who runs Reliance Funding in Wittier, CA, told us recently that “I have wholesale lenders calling me daily to sign up.” She notes, however that “Loans are not dropping out of the sky” but adds that she’s getting quite a few calls for second mortgages.
Whether a given mortgage meets the criteria of a qualified mortgage under the CFPB’s ability-to-repay rule, in and of itself, will not be considered a safety- and-soundness issue, according to joint supervisory guidance issued late last week by federal financial regulators. Nor will QM status – or the lack thereof – be a make-or-break issue in terms of Community Reinvestment Act compliance, the feds added, echoing similar guidance issued back in October. “From a safety-and-soundness perspective, the agencies...
The Conference of State Bank Supervisors called upon Congress to confer small creditor “qualified mortgage” status upon all mortgages held in portfolio by community banks, as part of a larger call to “right-size” federal regulations that disproportionately focus on the risks to huge institutions, at the expense of smaller institutions.One of the primary examples of regulatory relief for smaller institutions has come from the CFPB’s Small Creditor QM rule, the organization said in a white paper released last week. The small...
A mortgage lender’s documentation of compliance with the CFPB’s ability-to-repay qualified mortgage rule is just about as essential as compliance itself, a top industry attorney advised participants in a webinar sponsored by Inside Mortgage Finance Publications last week. And Joseph Reilly, a partner with the BuckleySandler law firm, reached into Zen lore to make his point. “If a tree falls in the forest and no one hears it, does it make a sound?” he asked. Similarly, “Starting in 2014: If a lender complies with ATR/QM but...
Officials from the CFPB and the Federal Reserve held a webinar earlier this month to help small creditors understand qualified mortgage lending under the bureau’s ability-to-repay rule. To begin with, there are two special categories of QMs for small lenders, portfolio QMs and balloon QMs. Also note that the ATR rule provides additional flexibility to small lenders in that the safe harbor has been expanded to 3.5 percent over the average prime offer rate. The first step to determine eligibility – of both the lender...
Student loan giant Sallie Mae’s plans to spin off its education loan management and consumer banking units into separate companies appear to be progressing, but could get sidetracked or shut down entirely by the CFPB, which recently slapped the firm with a cease-and-desist order. In September 2013, Sallie Mae Inc. “received a cease-and-desist order from the CFPB as part of its separate investigation regarding SMI’s payment allocation practices and procedures,” parent SLM Corp. said in a filing with the Securities and Exchange...
Last week, the CFPB issued a rule that allows the bureau to supervise for the first time the nonbank servicers of private and federal student loans that qualify as “larger participants” in the student loan servicing market. The bureau’s new rule defines as “larger participants” servicers with an “account volume” in excess of one million loans, thereby subjecting any nonbank student loan servicer that handles more than one million borrower accounts to the agency’s supervisory authority. Under the new rule, CFPB supervision...
Payday lender Checksmart Financial Company recently petitioned the CFPB to modify or set aside a civil investigative demand it received from the bureau. According to a copy of the petition, the CFPB “has commenced a nonpublic investigation ‘to determine whether payday lenders, check cashers, their affiliates, or other unnamed persons have been or are engaging in unlawful acts or practices in connection with the origination of payday loans and the cashing of payday loan proceed checks ... and whether bureau action is warranted.’”...
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