Last week, the Independent Community Bankers of America (“ICBA”) penned a letter to Director Cordray of the Consumer Financial Protection Bureau (“CFPB”) asking it to expand small creditor exemptions. Specifically, the ICBA asked the CFPB to “revise the current ability-to-repay/qualified mortgage (QM) rules and escrow requirements for higher-priced mortgage loans to allow community bank loans held in portfolio for the life of the loan to receive automatic QM safe harbor status and an exemption from the escrow requirements if the loans are higher priced.” The ICBA explained the different business model for community banks justifies different treatment than larger financial institutions and mortgage companies.
The current mortgage rules exempt small creditors, but only if they originate 500 or fewer first-lien mortgage loans annually and have less than $2 billion in total assets. The ICBA argues that the threshold is too low due to the portfolio size of many community banks.
Whether the letter is effective remains to be seen, but the CFPB has stated it is evaluating the TILA rules to assess their impact on the mortgage industry. Perhaps this additional QM status will be considered as the CBPB revisits these rules, or the small creditor thresholds will be adjusted. If your institution has questions about these issues, please contact Spilman.