Kraninger says May will be big month for two rules from CFPB: on QM, remittances disclosures exemption

May will be a big month for two rules – through proposed amendments to “qualified mortgage” (QM) regulations and finalized remittances regulations – from the federal consumer financial protection agency, its director said Tuesday.

Specifically: amending the QM rule with an alternative to the “debt-to-income” (DTI) ability to repay provision, and issuing a final rule on remittances exempting some issuers from disclosing actual fees and exchange rates.

In remarks to a conference of the Credit Union National Association (CUNA) in Washington, D.C., Consumer Financial Protection Bureau (CFPB) Director Kathleen (“Kathy”) Kraninger said the bureau is “working diligently to issue, no later than this May, a proposed rule seeking comment” on possible amendments to the QM rule.

Under that rule, mortgages guaranteed by one of the government-sponsored enterprises, or GSEs (the Federal National Mortgage Association [Fannie Mae] and the Federal Home Loan Mortgage Corp. [Freddie Mac]), are considered “qualified mortgages.” That is, the mortgage meets certain borrower and lender standards, including following the “ability to repay” rule. However, the provision affecting the GSE-issued mortgages – known as the “GSE patch” – is scheduled to expire early next year, Kraninger said.

As she noted earlier this month in testimony before the House Financial Services Committee, after reviewing comments, the bureau has decided to propose to amend the QM rule by moving away from the 43% debt-to-income ratio requirement. Instead, she said, CFPB would propose an alternative such as a pricing threshold to better ensure “that responsible, affordable mortgage credit remains available for consumers.”

“To this end, the Bureau is working diligently to issue, no later than this May, a proposed rule seeking comment on these possible amendments,” Kraninger told the credit union audience.

Meanwhile, Kraninger said, the agency will be addressing its rule on remittances, particularly an exception to the rule on disclosing actual fees and exchange rates. That exception, she noted, allows providers to disclose estimates of the information in certain circumstances. However, she said, the exception expires in July.

“Without the additional flexibility, some providers have indicated they may have to discontinue sending remittances for their customers,” she said.

To respond to those concerns, Kraninger said, the bureau issued a notice of proposed rulemaking (NPRM) in December to increase the safe harbor threshold that determines whether a company needs to comply with the rule. Under the proposal, she said, companies making 500 or fewer transfers annually in the current and prior calendar years would not be subject to the rule.

“After carefully considering the comments received, the Bureau intends to finalize its December 2019 NPRM in May,” she said.

Director Kraninger’s Remarks at the Credit Union National Association Government Affairs Conference

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