Community banks want more changes to mortgage rules


The Consumer Financial Protection Bureau (CFPB) announced changes to the agency’s qualified mortgage (QM) rules late last week.  The regulations, first unveiled in January, set out new standards meant to ensure borrowers are able to repay their home loans.

Among the changes is a provision making it easier for servicers to offer short-term forbearance plans for delinquent borrowers who need temporary relief, including a six-month forbearance option.

The updated rule will also require lenders to list an address, on certain documents, where borrowers can send requests, including error complaints to servicers.

Further, the final rule will provide exemptions in rural and undeserved areas from a new prohibition on high-cost mortgages featuring balloon payments – as long as the loans meet certain criteria.  

The ICBA said the latter measure is a step in the right direction, but it should be expanded in scope.

“Community banks provide balloon mortgage loans as a service so their customers can receive financing even if they have atypical property or financial situations,” the groups said. “Curtailing community banks’ ability to serve these customers would only harm underserved communities and our housing recovery.”