The Qualified Mortgage (QM) Rule went into effect January 10, 2014, and appears to have impacted lending practices by parsing out some potential applicants who had reduced chances of approval under QM before they even submitted an application. This could explain that while all purchase applications were reduced in volume, the origination rates were higher. The origination rate for White borrowers was 86 percent in 2014, compared to 84 percent the previous year.
The CFPB was established by the Dodd-Frank Wall Street Reform and Consumer Protection Act as the first federal financial regulator whose focus is protecting the rights of consumers.
No matter who you are—a credit card borrower, student borrower, homeowner, servicemember, or more—the CFPB is making major strides to ensure that you can safely do business with financial institutions.
“The CFPB’s rules promote safe and sustainable homeownership and prohibit some of the worst practices that led to the burst of the housing bubble,” said Dory Rand, president of Woodstock Institute. “We must ensure that the rules are strongly enforced so that mortgage borrowers can be confident that lenders are setting them up to succeed.”
Woodstock Institute and consumer advocates across the country were concerned about the original QRM definition because it would have excluded many borrowers of color, first-time borrowers, and low-wealth borrowers from the mortgage market by requiring a 20 percent down payment and strict credit history standards.
The CFPB recently finalized ability-to-pay rules that include a definition for a qualified mortgage (QM). The qualified mortgage definition incentivizes safe and sustainable mortgage lending by providing some protections from lawsuits to lenders in exchange for offering affordable, soundly structured loan terms.