On Wednesday July 11, 2012 the House Subcommittee on Financial Institutions and Consumer Credit held a hearing addressing consumer and market perspectives of mortgage reforms made by The Dodd-Frank Wall Street Reform and Consumer Protection Act. Both consumer and industry members provided testimony, including the Mortgage Bankers Association and American Bankers Association. The ongoing CFPB rulemaking to implement the Dodd-Frank ability to repay rule and special status under the rule for qualified mortgages was the focus of both trade groups’ testimony.
Both trade groups agreed that a qualified mortgage should be broadly defined so that qualified loans can be made to a wide range of borrowers. It is generally viewed by the trade groups as well as the consumer groups that if this is not done many deserving consumers will not be able to obtain mortgage loans.
The other point made by all was the need for a safe harbor, without a clear definition the threat of litigation might significantly limit lending through the tightening of already conservative underwriting standards and with some lenders actually exiting the business.
Both trade groups recently submitted letters during the comment period on the ability to repay rule including litigation costs.