The securities industry is
pleased that the Consumer
Financial Protection Bureau regulations implementing Dodd-Frank Act
requirements that mortgage lenders consider consumers’ ability to repay home
loans before extending them credit contains a true legal safe harbor for mortgages that fall within the scope of the qualified mortgage
definition. The Dodd-Frank Act
provides that qualified mortgages are entitled to a presumption that the
creditor making the loan satisfied the ability-to-repay requirements. However,
the Act did not specify whether the presumption of compliance is conclusive, thereby
creating a safe harbor, or is rebuttable. The regulations provide a safe harbor
for loans that satisfy the definition of a qualified mortgage
In a statement, SIFMA said it
believes that few rebuttable presumption loans are likely to be made and that safe harbor loans will define the market. Therefore it is
critical that appropriate, balanced parameters be chosen. SIFMA urged the CFPB
to show similar flexibility, inclusiveness, and responsiveness to feedback and
be willing to calibrate various parameters of the rules prior to the
implementation date.
SIFMA notes that the qualified mortgage definition is a key first step of housing finance reform, which is essential to revitalizing the flow of capital to the private securitization markets and increasing the availability of credit to U.S. consumers. As regulators continue to finalize new rules, including risk retention rules and the associated qualified residential mortgage definition and the capital rules that apply to mortgage lending and securitization, it is vital that they coordinate to ensure that all the rules work together seamlessly. SIFMA cautioned that a failure to coordinate these new rules could lead to conflicting and restrictive regulation that would slow the flow of credit to consumers and hamper the housing market recovery and economic growth. SIFMA said that the qualified mortgage definition is very important since it will set the parameters for the vast majority of mortgage lending in the
On July 11, 2012, in Congressional testimony, the
securities industry urged the Consumer Financial Protection Board to adopt a
safe harbor in the qualified mortgage regulations under the Dodd-Frank Act and
reject the alternative of a rebuttable presumption which, according to SIFMA, carries
the risk of assignee liability. In testimony before the House Financial
Institutions Subcommittee. SIFMA senior official Ken Bentsen, cautioned that a
rebuttable presumption in the qualified mortgage regulations would have transferred
liability to securitizers and investor, SIFMA urged a safe harbor. Given the
impact of assignee liability, SIFMA believes it critical that the final rules
provide for certainty of compliance with ability to repay requirements.