Legal Blog

Compensation and Compliance Matters: The QM Safe Harbor Just Became Less ‘Safe’

We already knew that the safe harbor for qualified mortgage loans did not protect lenders from common law and statutory claims that predated the ability to repay laws. In other words, those liabilities that existed prior to ATR laws continued to apply to QM loans. However, lenders believed that by originating QM loans they were protected from ATR claims. After last week, that may not be true. In connection its latest consent decree against a lender, the Consumer Financial Protection Bureau accused the company of engaging in unfair and deceptive acts in connection with originating loans that the borrowers could not “afford.” Specifically, the lender allegedly engaged in practices that resulted in loans being originated where the borrowers lacked either the “ability or desire to repay” the loan. Obviously, this sounds analogous to an ATR claim, but slightly dressed up, in that particular acts or practices would need to be identified that caused the origination of these “unaffordable” loans. Click here to read the entire article If you have any questions about please contact Ari Karen at: Bank Manager Reimbursementsakaren@offitkurman.com  | 240.507.1740 Ari Karen is an experienced litigator and speaker who has focused his practice in representing financial institutions in both government investigations and litigation before state and federal trial and appellate courts nationwide. Mr. Karen’s practice is diverse, representing clients on matters concerning banking regulations, Dodd Frank financial reform laws, contractual disputes, employment and labor statutes, wage-hour class actions, employment discrimination and fair lending matters, whistleblower complaints and non-competition claims, among others. You can also connect with Offit Kurman via FacebookTwitterGoogle+YouTube, and LinkedIn.