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MBA Advocacy Update

O’Connor, Steve; Killmer, Bill
The Consumer Financial Protection Bureau came under intense scrutiny last week at an oftentimes contentious subcommittee hearing on the Ability to Repay rule.

Both Democrats and Republicans criticized the Bureau for crafting a Qualified Mortgage definition that would restrict access to many otherwise qualified borrowers. The hearing also focused on the definition of points and fees, with members of the subcommittee speaking out in support of H.R. 1077, the Consumer Mortgage Choice Act, which would amend this calculation.

MBA, HPC Send Comment Letter to CFPB on QM Requirements
On May 24, MBA and the Housing Policy Council sent a joint comment letter ( to the Consumer Financial Protection Bureau advising various changes calculated to improve certainty when mortgage lenders use Appendix Q to define the debt-to-income ratio for qualified mortgages under the general definition.

In addition to the letter, the Associations provided CFPB with a detailed grid highlighting the outstanding issues with Appendix Q, as proposed originally and as amended. Both the letter and grid attempt to reduce the overreliance on subjective qualifications that could necessitate the use of manual underwriting processes rather than automatic underwriting systems.

The letter makes three recommendations to help ensure that Appendix Q can be used to underwrite loans for as many qualified borrowers as possible:

(1) Subjectivity makes the process more difficult for both the consumer and the lender; it should be removed where possible. Currently, the lender must affirmatively conclude the consumer’s income will continue. Instead, the Associations recommend that the lender receive confirmation of employment, which will suffice unless the consumer or employer offers a statement suggesting that the employment will not continue.

(2) The version of Appendix Q released with the QM rule requires a lender to analyze the consumer’s prospects for continued employment using employment records, qualifications, training and education, and receipt of a confirmation of continued employment from the employer. The Associations support the CFPB’s April 19 amendments striking the requirement to analyze qualifications, training and education and believe that confirmation and documentation of current employment and employment history is sufficient.

(3) The letter and grid recommend a new and simple quantitative test for determining the amount of income to include in the DTI analysis. This clear test would require lenders to use the lesser amount of the average of two year’s past income or the most recent year’s earnings. Taken together, the recommendations in the letter and grid seek to make Appendix Q’s QM DTI definition simpler and easier to determine.

For more information, please contact Ken Markison, (202) 557-2930; or Justin Wiseman, (202) 557-2854

MBA Submits Joint Trades Letter to CFPB on Delay of Prohibition on Financing Credit Insurance Premiums
On May 23, MBA and other representatives of the real estate finance industry wrote ( to the Consumer Financial Protection Bureau in support of the CFPB’s proposal to delay the June 1 effective date for section 1026.36(i), which prohibits the financing of single-premium credit insurance offered in connection with residential mortgages.

Additionally, the CFPB has also indicated that when it proposes a new effective date for section 1026.36(i), it also will seek public comment on the applicability of the prohibition to transactions in which credit insurance premiums are charged periodically.

In the letter, MBA and the joint trades expressed appreciation for the CFPB’s willingness to consider the effect of its original rule on these products, and offered some initial thoughts on the subject.

For more information, please contact Ken Markison, (202) 557-2930; or Justin Wiseman, (202) 557-2854

CFPB Greenlights State Use of Uniform State Test, Partners with CSBS on Framework for States
On, May 20, the Consumer Financial Protection Bureau expressly stated in CFPB Bulletin 2013-05 ( that state-licensed mortgage loan originators may be tested on their professional qualifications by the Uniform State Test.

More specifically, "[p]resenting test questions through a UST rather than a separate State test component would not preclude the test from being a qualified test under the SAFE Act, so long as all the requirements for a qualified test are satisfied. Therefore, a State may use a UST if it adequately tests required laws and regulations." This public guidance by CFPB indicates that the UST, developed by the Nationwide Mortgage Licensing System and Registry, is a valid process for MLO testing.

Based on feedback from state MBAs who urged their regulators to embrace the UST, MBA wrote ( to the CFPB in February to express its support for the UST, as well as to request that CFPB indicate in writing that a state's adoption of the UST will not violate the Secure and Fair Enforcement for Mortgage Licensing Act of 2008.

In its letter, MBA noted that many non-adopting states/agencies had expressed their desire for CFPB's public approval, in order to consider joining the current landscape of adopters ((, which totals 31 agencies in 29 states. The UST is a clear example of how the real estate finance industry and regulators are cooperating to meet consumer protection needs, while alleviating many of the unintended economic and employment constraints created by the SAFE Act.
The following day, CFPB and the Conference of State Bank Supervisors--acting on behalf of state financial regulatory authorities--built on in this desire for cooperation by announcing a framework ( which “establishes a process for coordination on supervision and enforcement matters. The framework will apply in situations where the CFPB and state regulators share concurrent supervisory jurisdiction.”

Among other things, this framework provides processes for their coordinating of exam schedules; development of comprehensive supervisory plans for particular institutions; coordination of information requests; streamlining of information sharing; and provision of advance notice of corrective actions.

For more information, please contact William Kooper, (202) 557-2737 or Scott Nowak, (202) 557-2811
MBA President and CEO Discusses Housing on CNBC
On May 23, MBA President and CEO David Stevens appeared live on CNBC’s Street Signs to discuss the state of, and future outlook for, the housing market. To view Stevens’ appearance, please click  

For more information, please contact John Mechem, (202) 557-2924

MBA’s Holds Legal Issues/Regulatory Compliance
MBA held a highly successful Legal Issues and Regulatory Compliance Conference last week, in Boca Raton, Fla. Nearly 900 lawyers, compliance officers, business leaders and regulators from all over the country carefully considered the demands of the new Consumer Financial Protection Bureau rules implementing Dodd-Frank's mortgage provisions.

Participants also received updates on other agencies' rules, as well as the latest trends in litigation, supervision and enforcement. MBA appreciated the attendance of a significant number of expert CFPB and government personnel which allowed for a full, frank and particularly valuable discussion for participants.

For more information, please contact Ken Markison, (202) 557-2930; or Justin Wiseman, (202) 557-2854

House Subcommittee Holds Hearing on ATR/QM Impact
On May 22, the House Financial Services subcommittee on Housing and Insurance held a hearing, Qualified Mortgages: Examining the impact of the Ability to Repay Rule. Witnesses for the single-paneled hearing included two assistant directors from the Consumer Financial Protection Bureau: Peter Carroll, assistant director for mortgage markets; and Kelly Cochran, assistant director for regulations.

The hearing centered on the effect that the Qualified Mortgage rule will have on the mortgage markets and the availability of credit. Although the focus was to be on the Ability to Repay rule, much of the discussion surrounded the 3 percent points and fees definition and the Consumer Mortgage Choice Act, H.R. 1077.  Moreover, several subcommittee members addressed their concerns with the affiliated title issue and voiced support for H.R. 1077 and its goals. The CFPB also insisted that they cannot make certain changes to the rule without Congress acting on them first.

For more information, please contact Dion Spencer, (202) 557-2741; or Len Wolfson, (202) 557-2712

CFPB Takes RESPA Enforcement Action
According to a recent Consumer Financial Protection Bureau press release (, on May 17 it ordered a Texas home builder to surrender more than $100,000 in kickbacks stemming from improper referrals under the Real Estate Settlement Procedures Act. The CFPB also banned the homebuilder from engaging in future real estate settlement services. 

Following the Dodd-Frank Act’s signature into law, authority for enforcement of RESPA was transferred to the CFPB. For more information on this action, please see the CFPB’s Consent Order

For more information, please contact Ken Markison, (202) 557-2930; or Justin Wiseman, (202) 557-2854

HUD Announces Sequestration Furlough Schedule
HUD resumed normal operations today following closure of its offices nationwide on Friday as a result of government-wide automatic spending cuts, also known as the sequestration, which took effect on March 1.

On designated furlough days, HUD employees are prohibited from engaging in any agency-related activities, and all HUD/Federal Housing Administration offices will be closed.

The HUD/FHA scheduled furlough days are:

• Friday, June 14;
• Friday, July 5;
• Monday, July 22;
• Friday, August 2;
• Friday, August 16; and
• Friday, August 30

Please note that response times for information and processing requests may be delayed by up to two additional days during these periods (this is in addition to the normal 2-3 day standard response time). On designated furlough days, certain FHA services, including the FHA Resource Center, FHA National Servicing Center and HUD Internet sites will still be available.

For more information, please contact Tamara King, (202) 557-2758; or Joe Gormley, (202) 557-2870