In public comments filed with six federal financial regulators, Community Associations Institute urged the adoption of practical mortgage standards to protect homeowners and community associations. CAI expressed support for key aspects of a revised federal regulation, known as “Qualified Residential Mortgage” or QRM, while also stressing the importance of limited priority for association liens.
“The federal agencies involved in writing the QRM regulation are to be commended for the methodical and thoughtful approach taken in crafting this important consumer protection. It isn’t often that federal regulators start over on a rulemaking, but the issues addressed by the QRM rule will affect every American homeowner. It’s important the regulators get this one right the first time,” said Tom Skiba, CAI’s chief executive officer.
The Dodd Frank Act charged federal financial regulators with developing standards to establish lower risk mortgage loans, known as “qualified residential mortgages.” Consumers are protected from fraudulent lending schemes as only loans that meet strict lending standards are eligible for the QRM designation. There are also benefits for lenders that originate QRM compliant mortgages as these loans are eligible for preferential regulatory treatment and are more likely to be sold in the secondary mortgage market.
“Lenders have said that the only option for the majority of borrowers in the foreseeable future will be a QRM compliant loan,” said Dawn Bauman, CAI’s Senior Vice President of Government and Public Affairs. “This is why CAI is working to ensure that homeowners in community associations have access to QRM loans. The revised QRM proposal is reasonable and addresses key issues raised by CAI members.”
All QRM compliant loans must meet stringent lending standards recently adopted by the Consumer Financial Protection Bureau. These rules require lenders to verify that borrowers have the ability to pay all monthly mortgage-related costs. This basic standard is embedded in the QRM rule and lenders must verify that a borrower can afford to pay association assessments. This will mean fewer foreclosures and stronger community associations.
To view CAI’s comment letter, click here.
CAI Government Affairs represents the interests of the 63.4 million people living and working in America’s community associations on legislative and regulatory issues at the local, state, and federal level of government. Contact CAI’s Government Affairs Department at government@caionline.org or (888) 224-4321.
