Today’s New York Law Journal published an article written by Professor Vincent DiLorenzo entitled, Qualified Mortgages: Safe Harbor from What? The article discusses a final rule issued by the Consumer Financial Protection Bureau in July of this year, amending the bureau’s earlier regulations defining and implementing the ability-to-repay requirements of the Dodd-Frank Act. The new regulations created a safe harbor for mortgages that meet certain, specified underwriting requirements, a.k.a. “qualified mortgages”. Professor DiLorenzo, who is a Senior Fellow of the Vincentian Center for Church and Society, writes of the amendment,
Consumer groups, industry members and government officials have struggled with the question of whether creditors are likely to offer only “qualified mortgages” in the future. The fear is that this would restrict availability of credit. The safe harbor created by the CFPB’s regulations, at first, seems to make this more likely. However, past experience indicates the risk of significant liability if creditors make non-qualified mortgages is likely small. Of course, only future experience will confirm or disprove that conclusion based, in part, on the CFPB’s enforcement policy with respect to the ability-to-repay requirements.
The text of the full article can be found here.