Washington, D.C. – Following the Consumer Financial Protection Bureau’s (CFPB) issuance of the Advance Notice of Proposed Rulemaking on the Qualified Mortgage Definition under the Truth in Lending Act (Regulation Z), CFA and other consumer groups wrote to Director Krainger to highlight the importance of ensuring that the GSE patch does not expire without adequate protections being put in place.

The GSE Patch’s success in facilitating access to homeownership for many creditworthy borrowers is due to its ability to allow creditors to use a richer and more complex approach in assessing borrowers’ ability to repay than that otherwise afforded creditors seeking Qualified Mortgage status. If the patch expires with the current debt-to-income (DTI) ratio of 43% remaining in place, the groups anticipate that the change will negatively affect the consumers for whom access to credit is already hard to come by. Specifically, low-income borrowers, borrowers of color, and borrowers with student debt will all be negatively affected without other adjustments made to the Qualified Mortgage definition.

In their letter, the groups call for the CFPB to eliminate the 43% DTI ratio threshold and the associated Appendix Q for prime and near-prime loans as singular requirements for Qualified Mortgage status. The letter further requests that the Bureau take steps to ensure that ability-to-repay remains a key component of loans with Qualified Mortgage status.

The groups look forward to working with the CFPB to ensure that the complex set of statutory and regulatory requirements designed to protect consumers participating in America’s mortgage markets do not instead operate to unfairly bar consumers from those markets.