Weekly RoundUp July 31, 2019

Financial Services Weekly News: CFPB Weighs Changes to Qualified Mortgage Rule

Editor's Note

In This Issue. The Consumer Financial Protection Bureau (CFPB) announced its intention to allow the “QM Patch,” which exempts Fannie Mae and Freddie Mac from the full scope of the ability-to-repay/qualified mortgage rule, to expire in 2021 and requested comment on potential revisions to Regulation Z’s general qualified mortgage definition in light of this expiration; and the Office of the Comptroller of the Currency (OCC) updated the “Corporate and Risk Governance” and “Internal and External Audits” booklets of the Comptroller’s Handbook. These developments are discussed in more detail below.

Editor's Note

Regulatory Developments

CFPB to Allow “QM Patch” to Expire and Requests Comment on Proposed Revisions to Regulation Z’s Qualified Mortgage Definition

On July 25, the CFPB released an advance notice of proposed rulemaking (ANPR) with respect to its plans for the temporary qualified mortgage (QM) treatment available for loans that are eligible for purchase or guarantee by either Fannie Mae or Freddie Mac (together, the GSEs), currently set to expire no later than January 10, 2021. The CFPB announced its intention to allow this temporary GSE QM treatment to expire in January 2021 or after a short extension (if need be to smooth the transition away from reliance on the temporary category). In light of this proposed expiration, the CFPB requested comment on potential revisions to Regulation Z’s general QM definition. The CFPB’s request for comment focused on two aspects of the QM definition: (1) whether the definition of QM should continue to include a measure of personal finances (like debt-to-income ratios or residual income) and, if so, how to calculate such a measure; and (2) whether an alternative financial-capacity measure should be allowed or whether the assessment of financial capacity should be limited to express statutory criteria. Comments will be due 45 days after publication of the ANPR in the Federal Register.

OCC Updates Comptroller’s Handbook

On July 25, the OCC issued updates to certain booklets in its Comptroller’s Handbook (the Handbook). The OCC updated the “Corporate and Risk Governance” and “Internal and External Audits” booklets of the Handbook. These new booklets were issued to reflect:

  • references to OCC issuances and auditing standards published since these booklets were last issued;
  • the integration of federal savings associations into certain regulations;
  • clarifications concerning supervisory guidance, sound risk management practices, legal language, or the roles of the bank’s board or management; and
  • clarifications of the duties and responsibilities of a bank's board and management.

The revised and updated booklets replace the booklets of the same title previously issued in 2016.

This week’s Roundup contributors: Bill McCurdy and Elizabeth Organ.