WASHINGTON—CFPB Director Kathy Kraninger indicated in a letter to lawmakers last week that the Bureau plans to extend the Ability to Repay/Qualified Mortgage rule’s exemption for loans eligible for purchase by the government sponsored enterprises (GSE) from its 43 debt-to-income (DTI) cap, an exemption commonly referred to as the GSE Patch. NAFCU has joined with eight other trade groups to urge the Bureau to continue using a modified DTI ratio and suggest changes to Appendix Q.
Based on Kraninger’s letter, the GSE patch – currently scheduled to expire on Jan. 10, 2021 – would be extended until the effective date of the new proposed rule or when either of the GSEs is removed from conservatorship (whichever occurs first).
According to reports, the Bureau is also considering adding a "seasoning" approach to the alternative QM rule to give safe harbor to certain loans when a borrower had made payments on time for a certain period.
In this week’s letter, the coalition asked the Bureau to "implement a QM definition that relies on measurable underwriting thresholds and the use of compensating factors for higher risk mortgages rather than either a pricing-based QM definition that uses the spread between the annual percentage rate (APR) and the Average Prime Offer Rate (APOR) as a proxy for underwriting requirements (the “APOR approach”) or a hard cut-off at either 43% or 45% DTI."
Provisions Get Support
Additionally, the coalition shared its support of:
- Continued use of a modified DTI ratio paired with certain compensating factors, which could be used in the underwriting process and would provide guidance to creditors on their use
- Changes to Appendix Q to rely on more flexible and dynamic standards for calculating income and debt.
"The expiration of the GSE Patch and what is developed to replace it will have significant implications for consumers’ access to affordable and sustainable mortgage finance credit," warned the coalition.
CFPB Staff Enjoy Work But Few Motivated by Senior Leaders
Meanwhile, many of the employees at the CFPB say they enjoy the work they do and believe it is important, but less than one-third feel they are motivated by the agency’s senior leadership. Separately, the CFPB said it has also developed a new “cost of compliance” survey.
According to the CFPB’s latest employee survey, in which 929 of its 1,424 employees participated in the survey conducted during the third quarter of 2019, Bureau staff have generally positive views of management but aren’t as happy when it comes to trusting or feeling inspired by senior leaders.
The Bureau said the overall findings find its employees support its mission.
“Of the 77 items included in the survey, 46 items were rated favorably (agree/satisfied or strongly agree/very satisfied) by 65% or more of respondent employees; these items are considered strengths,” the bureau said in releasing the findings. “Nine items were identified as challenges with percent unfavorable results (percent of respondents who disagree/strongly disagree or are dissatisfied/very dissatisfied) greater than 35%.”
The Findings
Among the findings, beginning with those that are more positive:
- 83.7% said they agreed/strongly agreed that they like the work they do.
- 85.3% agreed/strongly agreed that the work they do is important
- 79.6% said they agreed/strongly agreed that they know how their work relates to the agency’s goals
- 75.3% agreed or strongly agreed that they have enough information to do their jobs well.
- 46.3% agreed/strongly agreed that they have sufficient resources (for example, people, materials, budget) to get their jobs done.
- 80.8% agreed/strongly agreed that they have trust and confidence in their supervisor.
Less Positive Reviews
But many of the respondents were less positive in their views of higher management. Among the other findings:
- 39.5% of respondents agreed or strongly agreed the Bureau’s senior leaders maintain high standards of honesty and integrity (32.9% disagreed or strongly disagreed with that statement, and the rest either responded “neither” or “do not know”)
- 29.3% agreed or strongly agreed with the statement senior leaders generate high levels of motivation and commitment in the workforce; 45.3% disagreed or strongly disagreed.
- 33.9% agreed/strongly agreed with the statement they had a high level of respect for the organization’s senior leaders; 37.3% disagreed/strongly disagreed.
- 30.3% said they were satisfied or very satisfied with senior leaders’ policies and practices, while 39.3% said they were dissatisfied/very dissatisfied.
New Cost of Compliance Survey
Separately, the CFPB said it has developed a “cost of compliance survey” aimed at measuring expenses related to the collection of information for credit made by women-owned, minority-owned, and small businesses. The proposed survey is now out for comment.
The CFPB said the objective is to capture more information about potential “one-time costs” preparation, collection and reporting of data on such applications. The agency added the survey will not cover potential ongoing costs from actually collecting and reporting data.