JACKSON, Miss. (1/27/14)--The Mississippi Business Journal recently looked into how the Consumer Financial Protection Bureau's ability-to-repay/qualified mortgage (QM) rule is affecting credit unions in its state--particularly the 63 low-income designated credit unions.
The Jan. 24 article noted that the Jan. 15 Federal Reserve Beige Book reported "some bankers in the Southeast are putting the brakes on any non-QM lending, others are halting mortgage lending altogether."
Credit unions, meanwhile, are working to determine what is the right thing to do for their members and communities, according to Charles Elliott, president/CEO of the Mississippi Credit Union Association (MCUA).
Elliott told the Journal that low- and moderate-income borrowers make up about 90% of assets and 87% of members for the state's credit unions.
The QM/ATR lending rules specify a debt-to-income ratio no higher than 43% and a fairly clean credit history.
A lot of the people live day-to-day, the MCUA executive noted in the article, and are carrying debt loads in excess of 43%of their income, referring to debts beyond home mortgages. "We're trying to digest all of this to determine what the right thing to do is."
The CFPB rule allows some exemptions from the QM/ATR rule.
Hope FCU, Jackson, is not exempt, but the $169 million-asset credit union is moving forward with mortgage lending. "We are absolutely going to go ahead and continue to lend," CEO Bill Bynum told the Journal, adding that it will be more difficult for some of its branches.
The lending rules went into effect Jan. 10. The Credit Union National Association has advocated with the CFPB and the U.S. Congress that all credit unions should be exempt from the QM rule.
"Credit unions agree that it is always in the best interest of the credit union to assess a member's ability to repay when offering them a loan. That is what credit unions routinely did, even before the adoption of the rule," CUNA said as recently as Jan. 10 in a statement for a House hearing on the QM rule and its impact on consumers. CUNA also drove home that point when Jerry Reed, is chief lending officer at Alaska USA FCU, testified on CUNA's behalf in June before the House Financial Services subcommittee on financial institutions and consumer credit.
See resource link for Jan. 13 News Now "CUNA urges Congress, CFPB to exempt CUs from QM rule."