Although the title of the hearing implied a current problem, the purpose of the Subcommittee session was to determine if the proposed CFPB rule on qualified mortgages would affect the mortgage market when it becomes effective on January 1, 2014. At the hearth of the issues is a requirement that the lender determine if the borrower has the ability to repay the loan. If the lender does so properly, it will enjoy legal protections. Failure to properly identify a borrower’s ability to repay could expose the lender to civil litigation
Four of the witnesses represented lender trade associations and each lamented the lack of bright line guidance for the “ability to repay” test. For other requirements of the qualified loan, however, the witnesses sough greater flexibility to make loans that would qualify. Only the representative representing borrowers testified that the CFPB has achieved a proper balance between the best interests of the both lender and borrower.