CFPB Proposes Small Creditor Mortgage Relief

January 30, 2015 at 8:30 am 1 comment

Yesterday brought us another example of the CFPB at its best. It proposed several amendments to its mortgage rules that will make it easier for institutions to quality as small creditors for purposes of the mortgage rules. This designation is important because it is easier for smaller institutions to make qualified mortgages than it is for their larger counterparts. For example, small creditors aren’t subject to stringent debt to income ratio requirements.

Under existing law, to qualify as a small creditor an institution must make 500 or fewer mortgages in a calendar year and have $2 billion or less in assets. The CFPB is proposing to raise that threshold from 500 to 2,000 mortgages. In addition, creditors that reach the magical 2,000 threshold will be given a grace period so they have time to adjust to the tougher QM standards.

In addition, according to the preamble, the Bureau’s proposal “also makes the limit applicable only to loans not held in portfolios by the creditor or its affiliates.” This clarifies that a loan transferred by a creditor to its affiliates does not count toward the threshold limit as long as the affiliate doesn’t subsequently sell the mortgage.  The proposal also expands the definition of rural areas, which is helpful for QM purposes. On the negative side, the proposal would include the assets of a creditor’s mortgage originating affiliate(s) for purposes of calculating the $2 billion threshold.

Say what you want about the Bureau. It not only talks the talk, it walks the walk. It estimates that this proposal would expand the number of institutions that qualify as small creditors from 9,700 to about 10,400. The Bureau has been handed the unenviable task of strengthening mortgage underwriting standards without dramatically decreasing the number of people who ultimately qualify for a mortgage. To be sure, you won’t find this mandate in statute, but the American public and the politicians they elect are still inclined to believe that you can raise mortgage standards without keeping people from owning the home of their dreams. The Bureau’s the only agency I know that assiduously monitors the impact of its regulations on an ongoing basis and moves swiftly when it sees that its proposals have gone too far. Here’s a link to the proposal.


I’ll be back blogging on Tuesday as I am taking Monday off so that I don’t have to rush back from Long Island after celebrating at the 39th Annual Meier Family Superbowl Party.

Entry filed under: Mortgage Lending, Regulatory. Tags: , , .

Pressure mounts on ChexSystems Users Loosening the small business lending faucet

1 Comment Add your own

  • 1. Michelle Haag  |  January 30, 2015 at 8:40 am

    How is the weather up there

    Make it a great day!

    Michelle Haag | Member Services Support Specialist | New York Credit Union Association
    P.O. Box 15118
    Albany, NY 12212-5118
    Ph: (800) 342-9835, ext. 8207 | (518) 437-8207
    Fax: (518) 782-4305 | Find us on Facebook | Follow us on Twitter


    Is your credit union a member of the New York Credit Union Foundation? Learn more at


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Trackback this post  |  Subscribe to the comments via RSS Feed

Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 772 other followers


%d bloggers like this: