Statements on Qualified Mortgage Loans: Interagency Statements on Supervisory Principles for Qualified and Non-Qualified Mortgage Loans

Summary

This bulletin provides guidance to clarify supervisory expectations contained in two recent interagency statements on qualified mortgages that the Office of the Comptroller of the Currency (OCC) has issued for national banks and federal savings associations (collectively, banks).

The first statement, released today, is the “Interagency Statement on the Supervisory Approach for Qualified and Non-Qualified Mortgage Loans.”  This statement clarifies our expectations, both for safety-and-soundness and the Community Reinvestment Act (CRA), for regulated institutions engaged in residential mortgage lending relative to the Ability-to-Repay and Qualified Mortgage Standards Rule (Ability-to-Repay Rule), under the Truth in Lending Act and its implementing provisions. The Ability-to-Repay Rule takes effect January 10, 2014.

The second statement is the “Interagency Statement on Fair Lending Compliance and the Ability-to-Repay and Qualified Mortgage Standards Rule.” This statement clarifies fair lending risk and particularly the relationship between the Ability-to-Repay Rule and the disparate impact doctrine of the Equal Credit Opportunity Act, 15 USC 1691, and its implementing regulation, Regulation B, 12 CFR 1002. This statement was released October 22, 2013.

Highlights

The “Interagency Statement on the Supervisory Approach for Qualified and Non-Qualified Mortgage Loans” states

• a residential mortgage loan will not be subject to safety-and-soundness criticism solely because of its status as a qualified mortgage or non-qualified mortgage as long as the loan is prudently underwritten and key risk areas in residential mortgage lending, including loan terms, borrower qualification standards, loan-to-value limits, and documentation requirements are addressed.
• the requirements of the Ability-to-Repay Rule and CRA are compatible and the agencies that conduct CRA evaluations do not anticipate that an institution’s decision to originate only qualified mortgages, absent other factors, would adversely affect its CRA evaluation. 

The “Interagency Statement on Fair Lending Compliance and the Ability-to-Repay and Qualified Mortgage Standards Rule” states

• a bank’s decision to offer only qualified mortgages, absent other factors, does not raise the bank’s fair lending risk from a supervisory perspective.
• creditors should continue to evaluate fair lending risk as they would for other types of product selections, including careful monitoring of their policies and practices and implementing effective compliance management systems. 

Further Information

Please direct questions to any of the following OCC officials: Kimberly Hebb, Director for Compliance Policy, (202) 649-5470; Chrisanthy Loizos, Compliance Policy Specialist, (202) 649-5470; or Robert Piepergerdes, Director for Retail Credit Risk, (202) 649-6433 or (202) 649-6770.

Grovetta N. Gardineer
Deputy Comptroller for Compliance Policy

Darrin Benhart
Deputy Comptroller for Credit and Market Risk

Related Links

• Interagency Statement on the Supervisory Approach for Qualified and Non-Qualified Mortgage Loans (PDF)
• Interagency Statement on Fair Lending Compliance and the Ability-to-Repay and Qualified Mortgage Standards Rule (PDF)