Proposed Fix for QM Helps, but Falls Short of Needed Clarity

The CFPB proposed a 120-day period wherein lenders could cure an “overcharge” exceeding the cap if certain conditions were met. These conditions include (1) that the loan was originated in good faith with the belief that the loan did not exceed the 3% cap (which can be demonstrated by policies meant to avoid mistakes), (2) consistency in loan pricing amongst similar loans, and (3) that post-closing review procedures identify the mistake before it is brought to the lenders’ attention by the consumer or investor. While the possibility of such a procedure is certainly a positive development, one has to wonder whether the proposal—which is aimed at diminishing lenders’ fears in originating loans at the edge of the QM threshold—is the result of a fundamental misunderstanding of the underlying problem. Read Full Article on National Mortgage News