The Consumer Financial Protection Bureau is proposing to make a change that would enable the Qualified Mortgage designation when lenders exceed the fee threshold.
Currently, a loan can be designated as a QM under the Ability to Repay rule as long as points and fees don’t exceed 3 percent.
But in some cases, lenders process the loan believing that is a QM then discover after that the 3 percent threshold was exceeded.
So the CFPB is proposing limited circumstances where the excess fee can be refunded in order to meet QM requirements.
Among the requirements is that the loan qualifies as a QM in all other respects and the origination of the loan was done in good faith that it was a QM.
In addition, the creditor or assignee needs to maintain and adhere to policies and procedures for post-consummation review of loans and refunding to borrowers.
Refunds must occur within 120 days of the loan closing.
“Today’s proposal is designed to encourage lenders to provide access to credit to consumers seeking loans that are at or near the points and fees limit,” the CFPB said.
The regulator said it is seeking public comment on the proposals. Commenters will have 30 days once the CFPB publishes the proposed rule in the Federal Register.
The bureau is additionally proposing to make two changes that would help some nonprofit organizations continue to provided mortgage credit and servicing to underserved populations.
