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Are Loans Unsafe Outside QM?

According to nationalmortgagenews, bankers were relieved when the Consumer Financial Protection Bureau (CFPB) released its qualified mortgage rule (QM) in January, which gives the lender protection if a borrower defaults. But now some bank executives are hesitant to make loans outside the QM rule, and worry they could be rapped on the knuckles if they do not. In testimony before a House Financial Services subcommittee (financial institutions), Ken Burgess of First Bancshares of Texas says the risk is too high outside the QM rule, and his bank will no longer offer those loans. Other bankers noted tighter credit standards make it tougher to meet the Community Reinvestment Act requirements, which is lending to less creditworthy borrowers. Charles Kim of Commerce Bancshares representing the Consumers Bankers Association, says, “There’s a continual friction between safety and soundness regulation and then the need to make loans in underserved markets.” MHProNews has learned the panelists support a bill in both houses of Congress to create an independent appeals procedure for bank examinations.

(Image credit: foreclosuelistings)

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