Coalition Requests Changes to QM Patch

Numerous financial institutions, trade groups, and housing advocates, including the National Association of Hispanic Real Estate Professionals (NAHREP) issued a joint letter to the Consumer Financial Protection Bureau suggesting improvements to the QM Patch. 

David Acosta, the President of the NAHREP, said household growth is being driven by communities of color throughout the nation, and hispancis are projected to account for 56% of all new homeowners between 2020 and 2030.

Communities of color, he said, are more likely to have lower incomes, live in multi-generational households, minimal credit history, and are self-employed. Acosta added that the nation will “bear the economic consequences” if the mortgage market fails this demographic. 

"We are proud to help send a united message that it is critical that the CFPB not let a borrower’s debt to income ratio alone determine whether or not borrowers have access to the mainstream mortgage market,” Acosta said. “ great many factors go into a borrower’s credit profile and eliminating the QM Patch would lock many families out of the market, particularly for the growing number of Hispanic homeowners. NAHREP is deeply committed to ensuring that sustainable homeownership remains attainable for Hispanics in this country.”

In a letter to the CFPB, the coalition proposed the elimination of the general QM category debt-to-income (DTI) ratio requirement, maintain and enhance the existing regulatory language, and maintain the existing QM statutory safe product restrictions that prohibit risky loan features. 

The letter states that the GSE patch has facilitated access to homeownership to nearly 3.3 million borrowers who represent around 20% of the loans guaranteed by the GSEs more than five years ago. 

According to the letter, analysts estimate that nearly $260 billion of 2018 mortgage loan originations met the QM requirements under the GSE patch. 

The patch is scheduled to expire no later than January 10, 2021. 

Earlier this year, the CFPB announced that it would be focusing its attention on the Patch, on loans that are eligible to be purchased or guaranteed by either Fannie Mae or Freddie Mac. While proponents of the QM Patch say that its expiry in 2021 would make homes less affordable, especially in the lower-tier housing market, an article in Forbes points out that if the Trump administration wants to improve housing affordability, "it needs to expand the role of private markets through increased competition."