Banking Industry Split Over Qualified Mortgage Rules
In May 2011, the Federal Reserve Board issued proposed rules implementing provisions of the Dodd-Frank Act requiring lenders to verify a consumer’s ability to repay a mortgage. Under the law, a loan that meets the definition of a “qualified mortgage” (QM) is presumed to have met Dodd-Frank’s ability to repay requirements. The CFPB is expected to issue a final rule during the coming months.
Last year’s proposed rules developed two alternatives for those originating a QM: 1) a safe harbor that the lender has complied with ability to repay requirements; or 2) a rebuttable presumption of compliance. Loans that meet the QM standards are also exempt from being classified as “higher-risk” and thereby not subject to appraisal requirements outlined in the Dodd-Frank Act (section 1471).
Both the American Bankers Association and the Mortgage Bankers Association sent comment letters in favor of the creation of a safe harbor. A position that was reiterated when the two organizations were joined by more than 20 other national housing associations in a letter to CFPB Director Richard Cordray asserting that the adoption of a rebuttable presumption, over a safe harbor, “can be expected to result in the exit of lenders—large and small—from the market and a reduction in credit from those remaining. In a formal comment letter, MHI supported the adoption of a safe harbor for lenders originating QMs.
The Clearing House Association, which represents nearly 20 of the world’s largest banks including Bank of America and Wells Fargo, initially filed comments in favor of the safe harbor alternative. However, the group reversed course in March and joined with consumer groups Center for Responsible Lending and Consumer Federation of America in making joint recommendations for a broad QM standard as well as a rebuttable presumption approach. Click here to view the joint recommendation.
One facet of the joint proposal would allow QMs to have points and fees that do not exceed the greater of $3,000 or three percent of the total loan amount—so long as it is not a Home Ownership and Equity Protection Act (HOEPA) loan. MHI has advocated for the greater of three percent or $2,000 and has urged the CFPB to provide variance in applying HOEPA triggers to manufactured home loans.
While it is unclear when the QM rules will be released by the CFPB, under the Dodd-Frank Act the rules must be issued in final form by January 21, 2013 (with implementation by January 2014) or the statute itself goes into effect.
Fiscal Year 2013 Energy and Water Appropriations Bill Approved by Appropriations Committee
The House Appropriations Committee has approved the Fiscal Year 2013 Energy and Water Appropriations bill. The legislation provides the annual funding for the various agencies and programs under the Department of Energy (DOE) and totals $32.1 billion – a cut of $965 million below the President’s budget request.
With the support of Congressman Alan Nunnelee (MS-1st- R), a key member of the Appropriations Committee, MHI staff was able to include legislative language in the bill to better direct the Department of Energy’s efforts in developing the new energy standards for manufactured homes. Special thanks go to Jennifer Hall, Executive Director of the Mississippi Manufactured Housing Association, for her outstanding advocacy efforts on behalf of our industry. MHI will continue to work with congressional staff to seek relief from burdensome energy regulations imposed by the Energy and Security Independence Act (EISA) of 2007.
MHI believes that the new standards need to strike a balance: minimize energy use and costs for the next generation of manufactured homes while preserving affordability. Given the economic climate, the effect of the new energy efficiency standards should be evaluated for overall additional costs to already burdened consumers and to small businesses who are struggling to survive the highly uncertain economic environment.
MHI Petitions HUD to Withdraw Notice on Design Requirements for Southern Pine
Today, MHI petitioned HUD to withdraw a notice giving manufacturers less than a month to meet new building design requirements for southern pine.
MHI also asked HUD to issue the rule change in accordance with its own regulations and the law. According to the April 26th HUD memo to third party inspection agencies, effective June 1st, a new addition to a 2001 reference standard for design pressures for certain types of southern pine lumber will become part of the HUD Code.
The May 4, 2012 letter from MHI President Richard Jennison to Acting General Deputy Assistant Secretary for Housing Ronald Spraker, said that HUD is prohibited from automatically adopting reference standards as they are updated without complying with its own rulemaking requirements. In addition, HUD failed to seek review by the Manufactured Housing Consensus Committee, as required by Section 604(a)(4) of the Manufactured Housing Construction and Safety Standards Act.
Finally, HUD’s compliance date of June 1, 2012 does not conform to HUD regulations requiring that revised standards shall go into effect no sooner than 180 days after the date of its issuance.
Click here to view the MHI letter to HUD.
RV/MH Hall of Fame “Building Our Heritage One Brick at a Time”
The RV/MH Hall of Fame located in Elkhart, Indiana is embarking on a new fundraising project that gives industry members the ability to support the hall financially and honor loved ones or employees at the same time. Bricks that can be custom engraved are being sold and will eventually be used to adorn the grounds in a pathway or garden wall. A form for ordering bricks is available by clicking here. For more information or if you have questions, contact the RV/MH Hall of Fame at 1-800-378-8694.