CFPB Finalizes QM Cure; Excludes CUs from New Nonprofit Exemption
November 12, 2014 – On Nov. 3, 2014, the Consumer Financial Protection Bureau (CFPB) issued a final rule that allows creditors to secure qualified mortgage (QM) protection for loans that otherwise meet QM standards at consummation, but that exceed the three-percent limitation on points and fees. Creditors will have a limited window to “cure” the fee overages by refunding excess charges to the consumer, with interest. The rule is designed to alleviate the industry practice of keeping a “buffer zone” around the three-percent points and fees limitation, which the CFPB noted was creating unintended restrictions on access to credit.
The final rule also creates an additional “small servicer” definition for nonprofit entities that originate 5,000 or fewer mortgage loans, including those serviced on behalf of other nonprofit entities that operate under a common name or trademark to further a common charitable goal. The CFPB declined to extend the new exemption to credit unions because, according to the CFPB, credit unions have greater capacity to comply with the full mortgage servicing rule than other non-profits. The CFPB has previously declined to adopt a broad exemption for credit unions under the small servicer definition, and has not, as yet, addressed concerns that credit union service organization (CUSO) relationships are disqualifying some credit unions from the small servicer exemption.
The NASCUS summary with a link to the final rule is available here.