Published: September 2019

Revamping the CFPB’s “Qualified Mortgage” standard could impact credit availability

The Consumer Financial Protection Bureau’s (CFPB) proposed changes to the Qualified Mortgage (QM) definition would allow the government-sponsored enterprise (GSE) patch to sunset in 2021. Advocates warn that terminating the patch could cut off adequate access to mortgage credit to borrowers who are self-employed or more likely to work non-traditional jobs and don’t often conform to traditional QM standards, including borrowers of color and borrowers with student debt.

Consumer Action joined a broad coalition of advocacy organizations in a letter to the Consumer Financial Protection Bureau (CFPB) offering feedback on the expiration of the temporary “GSE patch,” which grants Qualified Mortgage status to loans eligible to be purchased or guaranteed by Fannie Mae or Freddie Mac. The termination of the patch could impact credit availability nationwide, given the broad impact of the patch on the post-recession mortgage landscape; about one in five GSE-backed mortgages originated in 2017 had a debt-to-income ratio over 43 percent. Should the CFPB allow the patch to sunset, advocates recommend eliminating the 43 percent debt-to-income (DTI) ratio threshold and the associated Appendix Q for prime and near-prime loans as singular requirements for Qualified Mortgage status.


Lead Organization

American's for Financial Reform (AFR)

Other Organizations

Americans for Financial Reform Education Fund| California Reinvestment Coalition | Center for Responsible Lending | Connecticut Fair Housing Center | Consumer Action | Consumer Federation of America | NAACP | NAACP Legal Defense and Educational Fund, Inc. | National Association of Consumer Advocates | National Association of Hispanic Real Estate Professionals | National Community Stabilization Trust | National Consumer Law Center (on behalf of its low-income clients) | National Fair Housing Alliance | National Housing Resource Center | Prosperity Now | The Leadership Conference on Civil and Human Rights | Woodstock Institute

More Information

For more information, please visit AFR.

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Revamping the CFPB’s “Qualified Mortgage” standard could impact credit availability   (2019.9.10_QM_Coalition_Letter_.pdf)




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