The Consumer Financial Protection Bureau (CFPB) is working on a qualified mortgage rule that will allow the mortgage market to meet the needs of borrowers “throughout the credit cycle,” agency chief Richard Cordray said in new testimony Tuesday morning.  

“We will seek to define those loans known as qualified mortgages carefully so that as the market stabilizes, every segment of the market is competitive and has the benefit of sufficient investor appetite to ensure liquidity,” Cordray told a House Oversight Committee.   

Elected officials and industry groups have been urging the CFPB to draft language that encompasses mortgages being originated today, but also loans that might be made in the future when the market returns to somewhat less strict credit standards.

Cordray noted that mortgage lending standards are “quite tight” today and “many creditworthy borrowers cannot buy homes.”

In drafting the QM rule, the bureau wants to make sure consumers are not sold mortgages they cannot afford, Cordray told the committee members. At the same time, the bureau wants to be certain consumers will be able find loans that meet the QM requirements in the marketplace.  

“We will seek to define those loans known as ‘qualified mortgages’ carefully so that as the market stabilizes, every segment of the market is competitive and has the benefit of sufficient investor appetite to ensure liquidity,” Cordray said.

The CFPB director also stressed that the QM rule, which he plans to finalize before the end of this year, will allow lenders to continue to make “prudent, profitable” loans for self-employed borrowers and other nontraditional segments of the market.

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