Agencies Provide Guidance on Qualified Mortgage Fair Lending Risks

Five federal regulatory agencies today issued a statement to address industry questions about fair lending risks associated with offering only Qualified Mortgages. In particular, industry members had expressed concern about their potential exposure to disparate impact liability under the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA) for making only or primarily QMs. They sought guidance on whether and to what extent compliance with QM requirements would be considered a legitimate business need that would provide a defense to disparate impact claims. The statement advises creditors that the regulators “do not anticipate that a creditor’s decision to offer only Qualified Mortgages would, absent other factors, elevate a supervised institution’s fair lending risk.”The rule becomes effective on January 10, 2014.

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