It may be on hold until the beginning of 2012, but "QRM is coming," warned John Battaglia, president of Cambridge Mortgage Group, at a panel Thursday during the New England Mortgage Bankers Conference.
Ruth Dillingham, special counsel for First American Title, and Rich Hogan, legislative and regulatory counsel for Rocky Hill-based title insurer CATIC, were also on hand to review the status of forthcoming federal regulations. Upcoming rule changes include not only the qualified residential mortgage (QRM) regulations, but also provisions related to appraisers and the Consumer Financial Protection Board’s (CFPB) efforts to simplify and reconcile mortgage application forms.
The QRM rules will likely not be finalized until January or February, Battaglia said, but given explicit language in the Dodd-Frank bill requiring the changes, the industry needs to understand that some version of QRM will be in effect, and soon.
But there is hope that the proposed rules may yet be amended to relax some of the tighter restrictions, since less than 30 percent of loans originated in 2009 would meet the current definitions, Battaglia said. One target for revision is the requirement that a borrower cannot have been reported as 60 days delinquent during the past two years, panelists suggested.
An area with even more potential for brokers and lenders to exert influence is on new CFPB mortgage forms, which have gone through several draft versions and remain in a state of flux, said Dillingham.
"There have been a lot of concerns about the forms as releases. Many don’t follow the existing rules," and several don’t seem to follow the same definitions the Good Faith Estimate introduced 18 months ago as part of RESPA reform, she said, making it likely that further changes are ahead.
Dillingham emphasized that the now is the time for lenders and brokers to perform their own stress-testing of the rules, in order to catch little details that might cause big headaches later. Some of those checks can be as simple as whether forms can be faxed without blurring into illegibility.
In at least some areas, the CFPB has seemed responsive to broker suggestions. The agency announced it wanted to change the forms to "roll up" many itemized charges into fewer categories to prevent consumers from feeling nickel-and-dimed, Dillingham said. "This is an excellent point for those of you who touch the consumers to put together some comments and feed them over to the CFPB and let them know: Have consumers actually been asking you for more itemization?" she suggested. "Do they ask you, how much of this was for the lawyers’ fee verses the title exam? Or do they really not care?"
"Just as you have to be responsible for your own licensing, you have to start being responsible for ‘is there something in the new rule that made sense?’ Let CFPB know."
