By a vote of 255-174, the House approved the “Portfolio Lending and Mortgage Access Act,” which would broaden the definition of qualified mortgages – those that qualify for the safe harbor – to include all mortgages held on a lender’s balance sheet. The new QM rule would recognize all residential mortgage loans held in portfolio by credit unions and other lenders as qualified mortgages for the purposes of the Consumer Financial Protection Bureau’s mortgage lending rules. Loans sold to the secondary market would would still be held to the existing QM criteria.
The logic in the rule change would be to allow lenders, using and risking their own money, flexibility in evaluating and lending money based on their own criteria, rather than the one size fits all that the government has dictated.
The Independent Community Bankers Association reports that 73% of community bankers have decreased their mortgage business or completely stopped providing mortgage loans due to the expense of complying with regulatory burden. One-out-of-five Americans who borrowed to buy a home just five years ago will not meet the underwriting requirements of the present CFPB’s mortgage rules.
The Portfolio Lending and Mortgage Access Act would change those rules, but despite passing by a comfortable margin in the House, the likelihood of the Portfolio Lending and Mortgage Access Act being enacted as a law is slim, due to the threat of veto from the White House, if the President were presented with H.R. 1210.
According to the Federal Reserve, the existing QM rule effects the qualifying of self employed borrowers and roughly one-third of Hispanic and African-American borrowers,” According to Representative Jeb Hensarling “This common sense legislation recognizes that the most effective way to ensure that a borrower has the ability to repay is not a one-size-fits-all, top-down regulation from Washington that mandates the terms of loans and underwriting practices.”
Don’t count on it. From all indications, it’ll be vetoed.
If you are in the Los Angeles area, have any questions or real estate sales or financing needs, feel free in contacting me.
Ron Henderson GRI, RECS, CIAS
Multi Real Estate Services, Inc.
Gov’t Affairs Chair – California Association of Mortgage Professionals
Specialist in the Art of Real Estate Sales and Finance
Real Estate market, mortgage rates, Los Angeles, San Fernando Valley, Conejo Valley, Simi Valley, Woodland Hills, West Hills, Calabasas, Chatsworth