The Consumer Financial Protection Bureau (CFPB) issued new rules that define a “qualified mortgage (QM),” which will protect borrowers from deceptive lending practices. The CFPB was charged with drafting and implementing the rules under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act to clearly define underwriting goals and other standards that a loan must have in order to ensure the borrower has the ability to repay the loan. When lenders issue a QM mortgage, they are afforded a safe-harbor from legal liability shielding them from being sued for originating a loan they knew the borrower could not repay. The new rules go into effect Jan. 10, 2014.
C.A.R. commends the CFPB rules, however, we need to further understand the implications of the rules on non QM mortgages, including jumbo loans. Because California has the largest jumbo housing market in the country, it’s important that the rule not be biased against borrowers in high cost states. C.A.R. will work with the CFPB to ensure these rules are applied in a manner that doesn’t restrict capital for well-underwritten mortgages in high cost areas.
