Regulatory Agencies Release Interagency Statement on Supervisory Approach for Qualified and Non-Qualified Mortgage Loans
December 19, 2013
Dec. 19, 2013
The NCUA and three other federal regulatory agencies have released a Joint Interagency Statement on the Supervisory Approach for Qualified and Non-Qualified Mortgage Loans.
The NCUA recognizes that many credit unions are in the process of assessing how to implement the bureau’s Ability-to-Repay Rule. The NCUA says that credit unions may originate both QMs and non-QMs, based on their business strategies and risk appetites. Residential mortgage loans will not be subject to safety-and-soundness criticism based solely on their status as QMs or non-QMs.
Regardless of whether residential mortgage loans are QMs or non-QMs, the NCUA continues to expect credit unions to underwrite residential mortgage loans in a prudent fashion and address key risk areas in their residential mortgage lending, including loan terms, borrower qualification standards, loan-to-value limits and documentation requirements. Institutions also should apply appropriate portfolio and risk management practices. Credit unions should continue to comply with the applicable guidance on residential mortgage lending issued by their state and federal regulators.
The NCUA also said it recognizes that some credit unions may only or predominantly originate QMs, particularly when the bureau’s Ability-to-Repay Rule first takes effect. As was recently address in the Interagency Statement on Fair Lending Compliance and Ability-to-Repay and Qualified Mortgage Standards Rule, the requirements of the bureaus’ Ability-to-Repay Rule and fair-lending laws are compatible. The NCUA does not anticipate that a credit union’s decision to only originate QMs, absent other factors, would adversely affect its fair-lending evaluations.
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