7/30/2019 Letter to Director Richard Cordray Re: AbilitytoRepay
Proposed Rule, Docket No. R1417 and RIN No. 7100AD75
1/4
300 New Jersey Avenue, NW Telephone 202.872.1260Suite 800
Facsimile 202.466.3509Washington, DC 20001 Website brt.org
November2,2012
TheHonorableRichardCordray
Director
BureauofConsumerFinancialProtection
1700GSt.,NW
Washington,DC20552
Re:AbilitytoRepayProposedRule,DocketNo.R1417andRINNo.7100AD75
DearDirectorCordray:
TheBusinessRoundtable(BRT)isanassociationofchiefexecutiveofficers
ofleadingU.S.companieswithmorethan$7.3trillioninannualrevenuesandnearly
16millionemployees.Althoughthe formalcommentperiod
fortheproposedrule
hasended,1wenonethelesswritetoshareourviewsonthedefinitionofQualified
Mortgage(QM) intheforthcomingabilitytorepayfinalrule.
Inthisregard,we
wish to share the combined perspectives of CEOs at key companies
because, as
proposed,thenewmandatewouldapplytoallmortgagetransactionsgoingforward
(beginning in January 2013) and would have a substantial impact
on mortgage
underwritingandcreditavailability.
Accordingly,ourmemberswhichrepresent
allsectors
of
the
U.S.
economy
have
atremendous
interest
in
ensuring
that
consumershaveaccesstoaffordablecredit,whichsupportsbotharobusthousing
recoveryandoveralleconomicgrowth.
Specifically,weurgetheConsumerFinancialProtectionBureau(CFPB)to
issue a final rule that includes the following: (1) a broad
definition of the term
Qualified Mortgage with objective, brightline underwriting
standards; (2) a
stronger safe harbor for such mortgages; (3) a reinstatement of
the affiliate
exemption frompointsand fees;and (4)harmonizationof
theQMdefinitionwith
the Qualified Residential Mortgages (QRM) definition. Moreover,
these policies
shouldbecoordinatedwithotherrelatedmandates,reformsandprogramsthat
whencombinedwill
greatly
impact
credit
availability
and
costs,
as
well
as
the
futureofhousingfinance.
BRTmembersbelievethattheabilitytorepayfinalrulemustbeprecisely
calibrated toprotect consumers from irresponsible
lendingwhileavoiding serious
disruptions inmortgagecredit,particularly
forcertainborrowersandunderserved
communities. Althoughmanyeconomists see some communities
recovery in the
1OnMay11,2011,theFederalReserveBoardissuedaproposedruletoimplementtheabilitytorepay
requirementsforresidentialloansasmandatedbySections1411,1412andportionsof1414ofthe
DoddFrank
Act.
Under
the
Dodd
Frank
Act,
jurisdiction
over
the
proposed
rule
was
transferred
to
the
CFPB,whichreopenedthecommentperioduntilJuly9,2012.
Chairman
W. James McNerney, Jr.The Boeing Company
President
John EnglerBusiness Roundtable
Executive Committee
Ajay BangaMasterCard Incorporated
Ursula M. BurnsXerox Corporation
Kenneth I. ChenaultAmerican Express Company
David M. CoteHoneywell International, Inc.
Alexander M. CutlerEaton Corporation
James DimonJPMorgan Chase & Co.
Michael T. DukeWal-Mart Stores, Inc.
Jeffrey R. Immelt
General Electric Company
Andrew N. LiverisThe Dow Chemical Company
Gary W. LovemanCaesars Entertainment Corporation
Robert A. McDonaldThe Procter & Gamble Company
Harold McGraw IIIThe McGraw-Hill Companies
Douglas R. OberhelmanCaterpillar Inc.
Edward B. Rust, Jr.
State Farm Insurance Companies
Randall L. StephensonAT&T Inc.
Rex W. TillersonExxon Mobil Corporation
7/30/2019 Letter to Director Richard Cordray Re: AbilitytoRepay
Proposed Rule, Docket No. R1417 and RIN No. 7100AD75
4/4
TheHonorableRichardCordray
November2,2012
4
The abilitytorepay regulations and the risk retention mandateas
well as other related
regulations,reforms(Basel
III,accountingchanges,etc.),andprogramswillgreatly
impactthefutureofhousing financeandtheavailabilityandcostofcredit
forborrowers. UndertheDoddFrankAct,a
securitizer or originatormust retain at least five percent of
the credit risk of the underlying assets,
unlessthe
loan
is
aQRM.
While
estimates
vary,
the
risk
retention
rule
could
cause
aprice
differential
betweenQRMandnonQRM loans. Further,asproposed,nonQRM
loanswouldbesubject toother
mandatesthatarecauseforconcern,suchasthePremiumCashCaptureReserveAccount,thatimpact
thecostoforaccesstocreditandremoveeconomicincentivestolendandinvest.
Both the risk retention and abilitytorepay requirementswill
affectmany lenders. If the
definitionsofQMandQRMunnecessarilydiffer,
increasedcompliancecosts for lenderswould result,
thus reducing the availability of loans to some borrowers. We
urge the CFPB to work with other
regulators toensure that these twosetsof regulations,andother
relevant regulationsandprograms,
are harmonized to the greatest extent possible to promote a
vibrantmortgage financemarket and
borroweraccesstoaffordablecredit.
II.Conclusion
Ultimately,anunnecessarilynarrowandsubjectiveQMdefinition,whichdoesnotcoveralarge
percentage of loans or does not include a clearlydefined safe
harbor, could further undermine the
housingandmortgagemarketsandthreatenthenationseconomicrecovery.
Ourmembersappreciate
your considerationofourviewson the abilitytorepayproposed
rule,andwewouldwelcome the
opportunitytodiscussthemingreaterdetail.
Withyourleadership,webelieveCFPBisinapositionto
createcertainty,instillconfidence,anddoitsparttohelprestorethehousingmarket.
Sincerely,
DanielS.Fulton
President&CEO
WeyerhaeuserCompany
Chair,BRTSubcommitteeonHousing
