The Consumer Financial Protection Bureau (CFPB) recently announced proposed amendments to Regulation Z. Significantly, one of the three proposed amendments affects qualified mortgages (QM), which are entitled to a presumption under the Dodd-Frank Act that the creditor making the loan has satisfied the ability-to-repay requirements.
The proposed amendment would allow for a post-consummation curative process by which a lender who originated a loan with the good faith belief that the loan was a QM, but who later learns that it exceeded the allowable points and fees limits, could cure the defect by refunding the overage amount to the consumer. If the creditor takes the outlined curative steps within 120 days of the consummation of the loan, the loan would retain its QM status. The creditor would also be required to maintain and follow policies and procedures for review of loans and refunding to consumers amounts that exceed the applicable QM limit.