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| Cordray Talks QM at House Hearing
Semi-annual CFPB report discussed in contentious House hearing
Sept. 12, 2013
By Mortgage Daily staff
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The U.S regulator of consumer financial products sparred with GOP legislators and highlighted how the Qualified Mortgage designation isn't limited to borrowers with low debt-to-income ratios. Concern was raised about the QM impact on community banks.
Consumer Financial Protection Bureau Director Richard Cordray delivered the regulator's semi-annual report Thursday to the House Committee on Financial Services.
Committee chairman Rep. Jeb Hensarling, a Republican from Texas, began his questioning by highlighting how the director's staff members are "uniquely unresponsive to our inquiries."
Hensarling referenced a July 9 House hearing where CFPB Deputy Director Steven Antonakes responded to many questions about data collection by promising accurate numbers later. Hensarling then proceeded to play an edited video that mocked the deputy's repeated responses promising precise numbers later.
When pressed by the chairman about when the CFPB will be providing the responses, Cordray responded, "any day now." |
C-Span photo of Richard Cordray |
Hensarling highlighted concern from community financial institutions about the 43 percent DTI ratio QM limitation. He cited an example of someone who has a 44 percent DTI, 20 percent down and a 740 FICO score.
"They will be denied credit under this standard versus somebody who has a 43 percent DTI , has a 440 FICO and puts zero percent down," Hensarling said. "So on the one hand you could be restricting credit to deserving credit-worthy borrowers, and on the other hand -- although I know you are not a safety and soundness agency -- you could be helping put the government imprimatur on exactly the type of mortgages that helped bring about the crisis in the first place."
Cordray responded by first noting that Hensarling was inaccurate in his statement that each loan must have a maximum 43 percent DTI. He explained that there are many channels outside the QM.
"That is one of the categories, bright line categories, that get you to a qualified mortgage," the director stated. "There is a separate category, also a bright line category, if the loan is eligible for purchase by any of the GSEs in conservatorship, Fannie Mae or Freddie Mac, that's a very significant band of things that could be above a 43 DTI."
Cordray described a third category where creditors with less than $2 billion in assets can count portfolio loans as QMs even if they don't have a 43 percent DTI.
Rep. Maxine Waters (D-CA) came to the defense of Cordray and praised his appointment as CFPB director. She also requested that Cordray do more to help community banks with QM. |
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