How the CFPB should define “qualified mortgages” in its proposal to implement the Dodd-Frank ability to repay provisions continued to be a focus of questioning when CFPB Director Richard Cordray appeared last week before the House Financial Services Committee to discuss the current state of the CFPB and its latest Semi-Annual Report to Congress.  In responding to criticism from Representative Grimm of New York that the QM rule might contract credit access, Director Cordray indicated that the CFPB has not yet decided whether it will adopt a safe harbor or rebuttable presumption approach.  He is reported to have commented that some of the differences between the two approaches have been “overstated” and that the CFPB will attempt to reduce litigation risk and “draw some bright lines.” ( A webcast of Director Cordray’s full testimony can be viewed here.) 

The American Bankers Association, together with numerous trade groups and housing industry organizations, sent a letter to Director Cordray this past April urging the CFPB to adopt a safe harbor approach.  The ABA, together with nine other trade groups, reiterated that position in another letter sent to Director Cordray on September 14. The letter asserts that “a safe harbor will result in far more mortgage borrowers obtaining sustainable credit than a QM rule with a rebuttable presumption.”