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Letter to Director Richard Cordray Re: Ability-to-Repay Proposed Rule, Docket No. R-1417 and RIN No. 7100-AD75

The Honorable Richard Cordray 
Director 
Bureau of Consumer Financial Protection 
1700 G St., NW 
Washington, DC 20552 
 
Re: Ability‐to‐Repay Proposed Rule, Docket No. R‐1417 and RIN No. 7100‐AD75 
 
Dear Director Cordray: 
 
The Business Roundtable (“BRT”) is an association of chief executive offers of leading U.S. companies with more than $7.3 trillion in annual revenues and nearly 16 million employees. Although the formal comment period for the proposed rule has ended, we nonetheless write to share our views on the definitions of “Qualified Mortgage” (QM) in the forthcoming “ability-to-repay” final rule. In this regard, we wish to share the combined perspectives of CEOs at key companies because, as proposed, the new mandate would apply to all mortgage transactions going forward (beginning in January 2013) and would have a substantial impact on mortgage underwriting and credit availability. Accordingly, our members—which represent all sectors of the U.S. economy—have a tremendous interest in ensuring that consumers have access to affordable credit, which supports both a robust housing recovery and overall economic growth. 
 
Specifically, we urge the Consumer Financial Protection Bureau (“CFPB”) to issue a final rule that includes the following: (1) a broad definition of the term “Qualified Mortgage” with objective, bright-line underwriting standards; (2) a stronger safe harbor for such mortgages; (3) a reinstatement of the affiliate exemption from points and fees; and (4) harmonization of the QM definition with the Qualified Residential Mortgages (QRM) definition. Moreover, these policies should be coordinated with other related mandates, reforms and programs that—when combined—will greatly impact credit availability and costs, as well as the future of housing finance.
 
BRT members believe that the “ability-to-repay” final rule must be precisely calibrated to protect consumers from irresponsible lending while avoiding serious disruptions in mortgage credit, particularly for certain borrowers and underserved communities. Although many economists see some communities recovery in the housing market, lending is still largely restrained. The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), together with the proposed rule, present CFPB with an opportunity to help facilitate a stable mortgage finance market. Conversely, a narrow or ambiguous QM definition without a safe harbor rule, and with a points and fees cap that includes affiliate fees, could further undermined the housing and mortgage markets to the detriment of consumers and threaten the nation’s economic recovery. 
 
We offer the following principles to ensure credit availability for qualified borrowers, instill confidence, and ultimately, help restore the market:

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