CUNA, NAFCU Support CFPB's Extention of the Qualified Mortgage GSE Patch

This week, CUNA and NAFCU sent a letter to the CFPB supporting the agency’s extension of the Qualified Mortgage (QM) Government Sponsored Enterprises (GSE) Patch.

The GSE is scheduled to expire on Jan. 10, 2021, but a proposal to extend it would push it out until there is an effective date of the final QM rule from the CFPB.

In the letter to the CFPB, CUNA argued that key beneficiaries of the GSE Patch have been the underserved population of the country. Therefore, “letting the patch expire in 2021 with no change will further disadvantage these already underserved groups.”

The letter, submitted by CUNA Senior Director of Advocacy and Counsel Damon Smith, stated, “CUNA supports the extension as a prudent and necessary action to ensure consumers’ continued access to affordable mortgage loans while the Bureau completes its rulemaking on the General QM definition. We strongly believe the CFPB should avoid gaps in QM coverage that would disadvantage borrowers and create uncertainty in the nation’s economically vital mortgage lending market.”

NAFCU Senior Regulatory Affairs Counsel Kaley Schafer wrote, “An extended sunset date will provide the Bureau sufficient time to finalize the General QM loan definition, minimize market disruptions and account for the impacts due to the COVID-19 pandemic.”

According to a published statement in June by CFPB Director Kathleen Kraninger, “The GSE Patch’s expiration will facilitate a more transparent, level playing field that ultimately benefits consumers through promoting more vigorous competition in mortgage markets. The Bureau is proposing to replace the Patch with a price-based approach to QM loans to preserve consumer access to mortgage loans while also making sure consumers have the ability to repay them. The Bureau is committed to ensuring a smooth and orderly mortgage market throughout its consideration of these issues and any resulting transition away from the GSE Patch.”

According to NAFCU and CUNA’s letter to the CFPB, both organizations want to ensure that the effective date of the GSE Patch will gradually sunset to allow for a transition period for QM compliance, especially during the pandemic. “It would be ill-advised and short-sighted for the Bureau not to consider the impact the COVID-19 pandemic is currently having on the economy, credit markets and consumers’ financial well-being in moving forward with this rulemaking,” the letter stated.

Schafer wrote, ”NAFCU members reported moderate to major increases in mortgage loan demand as an impact of the COVID-19 pandemic. Given this increased demand, NAFCU members should be focusing on serving their members, including providing loans under the GSE Patch.”