How CFPB Can Increase Access to Homeownership

The Consumer Financial Protection Bureau (CFPB) has proposed transitioning from a debit-to-income-centric qualified mortgage (QM) to a price-based form instead. The upshot: Meaningfully expanding access to credit for those two groups while maintaining a lid on defaults, according to a new brief, The CFPB’s Proposed QM Rule Will Responsibly Ease Credit Availability; Data show it can go further, published by the Urban Institute’s Housing Finance Policy Center. 

However, a flaw in the ointment: The proposed rule centers on the inadequacy of the proposed price caps for safe harbor and qualified mortgages, they also noted, explaining that there should be an increase in both to put credit within easier reach.  

The CFPB should—at the very least-- establish an automatic, annual re-evaluation of rate spreads and adjustments to the caps to keep the market functioning smoothly at all times, Urban Institute recommended.  

 A new focus on Opportunity Zones reportedly took place during a special event in Charleston, South Carolina, that brought together lenders and federal officials in discussions of investment and credit access opportunities.

The event brought together approximately 50 bankers, developers, and community advocates from across the mid-Atlantic region. Featured presentations during the event included an overview of Opportunity Zone projects already underway in the region and insight on the potential for additional initiatives that could involve smaller community- and minority-owned banks serving the area. 

Acting Comptroller of the Currency for the Office of the Comptroller of the Currency (OCC) Brian Brooks highlighted how participating lenders would be able to receive credit under his agency’s new Community Reinvestment Act (CRA) rule. 

“Today, bankers, community developers, and advocates got together to explore how to green-light projects that increase access to capital to meet local housing and community reinvestment needs,” said Brooks. “By combining incentives associated with Opportunity Zones and credit under the OCC’s new CRA rule, we have a powerful force for supporting underserved areas and creating sustainable change for communities in South Carolina and across the nation.” 

Meantime, in April, analysis by the Urban Institute says the COVID-19 health crisis is beginning to “constrict the mortgage credit box” similar to what happened during the period following the Great Recession from 2010 to 2013. 

“In the wake of the 2007–09 Great Recession, it was hard for people with less-than-perfect credit to secure a mortgage. This stood in stark contrast to the years leading up to the financial crisis when it was too easy to secure a mortgage,” the report said.  

However, in response to the Great Recession, restrictions and risks through regulations caused lenders to become wary of lending to borrowers with “anything less than pristine credit.”  

The report adds that for the past six years, Fannie Mae and Freddie, along with the Federal Housing Administration, have made strides in expanding the credit box to borrowers.