The Mortgage Bankers Association wants to add six more months to the Consumer Financial Protection Bureau’s latest GSE patch proposal.
In a letter sent to the bureau on Aug. 10, the MBA recommended extending the sunset provision to “ensure the continued availability of sustainable, affordable mortgage credit” and eliminate any potential gaps in QM coverage.
The current iteration of the proposal is set to terminate on April 1, 2021 and this extension would push the patch’s life to an expiration of Oct. 1, 2021, with room for further change if necessary. The MBA voiced its support of the extension and of bolstering the QM parameters.
Among its recommendations, the MBA wants to redefine the extension to cover loan applications within the window versus only loans closing in the time frame. This would prevent mortgages from falling through the cracks: being unable to use either the patch or the new QM parameters.
The MBA called for the extension to establish a cap on a QM loan’s allowable points and fees. Right now, creditors are allowed to refund excess points and fees above a 3% threshold on mortgages above or equal to $109,898 for transactions done by Jan. 10, 2021.
“The cure allows lenders to resolve errors that would, if left unresolved, remove a loan’s QM status,” the MBA’s letter said. “As a result, the cure provides an additional layer of compliance certainty. Further, when exercised, the cure benefits consumers in the form of money that is refunded to them. While the QM proposals put forth do not include revisions to the rule’s points and fees provisions, MBA strongly encourages the Bureau to consider making the points and fees cure permanent.”
The GSE patch provides creditworthy borrowers who fall outside the typical QM bounds access to affordable mortgage credit. The CFPB estimates the patch aided one out of every six loans in 2018.
The patch and its extension have no bearing on pulling the GSEs out of conservatorship, but discontinued conservatorship would terminate the patch.
