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Jeffrey P. Naimon quoted in a Law360 article, “CFPB's plan to tear off mortgage 'patch' risks market unrest”


Jeffrey P. Naimon

Jeffrey P. Naimon was quoted on July 30, 2019 in a Law360 article, “CFPB's plan to tear off mortgage 'patch' risks market unrest,” which discussed the Consumer Financial Protection Bureau’s plan to end the GSE patch that has unfairly privileged Fannie Mae and Freddie Mac, and how to do so without disturbing the mortgage market. The article stated, “In an early-stage rulemaking notice released last week, the CFPB said it doesn't intend to make permanent a provision in its qualified mortgage standards that affords certain legal protections to loans eligible for purchase by government-sponsored enterprises Fannie and Freddie. Nicknamed the GSE patch, this provision is set to sunset by January 2021.  This exemption went into effect in 2014 with the rest of the qualified mortgage standards, reflecting CFPB anxieties about otherwise creditworthy borrowers above the 43% DTI threshold being shut out from the still-recovering mortgage market while risk-averse lenders acclimated to the new standards. That's where the "patch" nickname comes from — it was meant to be only a temporary workaround.”

Naimon noted, “They adopted the patch with much gnashing of teeth because it became clear when they were coming up with the rule that there were going to be a lot fewer mortgage loans available in the United States if they didn't do something that made it easy to know that you had a loan that was QM. Being QM made a big difference.”

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