Since the Bureau of Consumer Financial Protection (CFPB) has delayed finalizing the qualified mortgage (QM) rule until the end of the year, the mortgage industry is advocating that the CFPB delay its plans to release a single mortgage disclosure form until after the QM rule is finalized. The Dodd-Frank Act calls for the CFPB to release the new mortgage disclosure form, which would combine and streamline disclosures required by the Real Estate Settlement Procedures Act (RESPA) and Truth in Lending Act (TILA) by July 2012. In contrast, the Dodd-Frank Act does not require the CFPB to define qualified mortgages, part of the larger ability-to-repay rule, until January 2013.
CFPB Deputy Director Raj Date announced the CFPB’s intention to release the single mortgage disclosure form by the July 21, 2012 deadline in a recent statement to the House Financial Services Subcommittee on June 20, 2012. Date also announced that the CFPB will issue a proposed rule that would provide detailed requirements and guidelines for filling out the forms. At the same hearing, mortgage industry advocates expressed concern that releasing the single mortgage disclosure form without the QM rule would result in confusion or suppress demand for housing. Bill Cosgrove of Union National Mortgage Company, in a written statement on behalf of the Mortgage Bankers Association, stated that “No matter how well intentioned these rules may be, they cannot be allowed to harm American families, the mortgage market or the nation’s still fragile economic recovery.” Industry advocates called on Congress to give the CFPB more time to finalize the single mortgage disclosure form so that the forms could incorporate the QM rule among other significant Dodd-Frank requirements. Writing on behalf of the American Bankers Association, Brenda Hughes of First Federal Savings Bank in Twin Falls, Idaho, emphasized, “This is a massive and important undertaking. The goal must be to achieve a workable and lasting framework of clear and comprehensible mortgage disclosures, and rigid time frames should not trump quality.” Industry groups testifying in favor of a delay in the issuance of the rule included the National Association of Realtors, the American Land Title Association and the Consumer Mortgage Coalition.
Industry groups are also calling on the CFPB to convene a small business panel to address the potential affects of the QM rule on small businesses. Under the Small Business Regulatory Enforcement Fairness Act (SBREFA), the CFPB is one of the three agencies required to solicit feedback from small businesses on rules that may affect them. Because the QM rule was initially proposed by the Federal Reserve Board, however, the rule is exempted from the general requirement. Nevertheless, mortgage industry advocates have indicated that the CFPB should honor the spirit of the SBREFA and consult with small businesses, as the QM rule could have a significant impact on them.