WASHINGTON, D.C. – Today, U.S. Sen. Sherrod Brown (D-OH) – Ranking Member of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, called on the Consumer Financial Protection Bureau (CFPB) to maintain critical consumer mortgage protections as it reviews its “qualified mortgage” (QM) rule.  

The Dodd-Frank Wall Street Reform and Consumer Protection Act requires lenders to evaluate whether a borrower has the “ability to repay” their mortgage. If a lender doesn’t meet this basic standard, a borrower can hold them accountable in court. In its final rule implementing this requirement, the CFPB created a category of loans called Qualified Mortgages (QM), which protects lenders from liability as long as the mortgage loan meets certain standards. QM loans have none of the predatory features that were common before the crisis, limit fees, and require that the borrowers’ debt to income ratio is at or below 43 percent. Since 2014, loans that can be sold to Fannie Mae and Freddie Mac can get QM legal protection with a higher debt to income ratio, but this arrangement was temporary and will expire in January 2021 without action from CFPB.

The CFPB announced yesterday that it would let the QM arrangement for Fannie and Freddie expire in January 2021 and asked for comment on whether it should change the QM definition. Brown said that the Bureau should still require lenders to verify and document each borrower’s individual circumstances in order to protect consumers and meet the needs of a diverse range of borrowers in today’s housing market.  

“The focus of the Consumer Protection Bureau should be protecting consumers. The action they take on this critical rule should be first and foremost about providing access to sustainable mortgages that fit the needs of individual consumers in today’s housing market, and they should hold lenders accountable when they don’t live up to their obligations,” said Brown “Given CFPB’s record under President Trump, I’m not confident they will protect the interests of consumers in this process.”