updated 10/25/13 11:40 AM
QM LOANS WON'T VIOLATE ECOA, REG B
Agencies Release Joint Statement
Five federal regulatory agencies have issued a joint statement in response to inquiries from creditors about whether they would be liable under the disparate impact doctrine of the Equal Credit Opportunity Act (ECOA) and its implementing regulation, Regulation B, by originating only Qualified Mortgages under the Ability-to-Repay and Qualified Mortgage Standards Rule that takes effect Jan. 10.
These agencies recognize that some creditors might be inclined to originate all or predominantly Qualified Mortgages, particularly when the Ability-to-Repay Rule first takes effect. They also recognize lenders’ concerns that doing so may be at odds with the ECOA and Regulation B.
The agencies' joint statement clarifies their position that the requirements of the Ability-to-Repay Rule and ECOA are compatible, in that creditors may act "on the basis of their legitimate business needs."
Given this, "The agencies do not anticipate that a creditor's decision to offer only Qualified Mortgages would, absent other factors, elevate a supervised institution's fair lending risk," the statement said.
The joint statement was issued by the Board of Governors of the Federal Reserve System (FRB), Consumer Financial Protection Bureau (CFPB), Federal Deposit Insurance Corp. (FDIC), National Credit Union Administration (NCUA), and the Office of the Comptroller of the Currency (OCC).
The NCUA, OCC, FRB, and FDIC also included a statement that the same principles apply in supervising institutions for compliance with the Fair Housing Act (FHA) and Housing and Urban Development's (HUD) implementing regulation, 24 C.F.R. Part 100.5. Each of these agencies has supervisory authority as to FHA.
"The California and Nevada Credit Union Leagues are pleased with the joint statement," said Sharon Lindeman, vice president of regulatory advocacy for the Leagues. "This decision will ease at least one compliance concern for credit unions as they make important decisions about their product offerings and compliance with the January 2014 Qualified Mortgage Rules."
Click here to read the multi-agency statement.
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