Alert July 24, 2012

Congress Urges CFPB to Structure Qualified Mortgage Rule as Legal Safe Harbor

In a letter to the CFPB, several members of the House Financial Services Subcommittee on Financial Institutions and Consumer Credit urged the CFPB to structure the qualified mortgage rule as a “strong legal safe harbor” as opposed to a rebuttable presumption. The letter pointed out the FRB’s statement in the preamble to the rule, which noted the “drawback” of treating a qualified mortgage as providing a rebuttable presumption of compliance because of the legal uncertainty and “little incentive to make the ‘qualified mortgage.’”  The letter warned of the possibility of restricting credit accessibility for borrowers should the rule not be structured as a legal safe harbor.

Testifying before the same subcommittee, Deputy Director Raj Date stated that the CFPB wants to “craft a sensible rule that works for the market throughout the credit cycle, but “mindful of just how fragile and risk-averse the market” is today.