Dodd-Frank mortgage reform and Habitat




By John Snook, Habitat for Humanity International’s director of state and local relations

Habitat for Humanity International recently submitted testimony to the U.S. House of Representatives Financial Services Committee on the impact of Dodd-Frank’s home mortgage reforms. We have concerns that the Consumer Financial Protection Bureau’s qualified mortgage rule could threaten Habitat’s ability to meet the needs of key underserved segments of the housing market.

Passed as part of the Dodd-Frank Act, the QM rule seeks to prevent future housing market bubbles by standardizing how mortgage lenders document an applicant’s ability to repay a loan. But as the CFPB moves forward, it is critical that this rule is written broadly enough to support the work of nonprofit lenders like Habitat, while still protecting the stability and integrity of the for-profit mortgage market.

Habitat partner families by design do not qualify under standard underwriting guidelines used by banks and other private lenders. So there is significant risk that Habitat’s successful mortgage model will not be included in the new qualified mortgage ability-to-repay definition. Banks and state housing agencies would then be precluded from partnering with Habitat affiliates since non-qualified mortgage loans would face significantly higher liability risks.

Habitat is hopeful that these protections will be designed in a manner that rewards existing good actors already working on behalf of consumers within the market. One-size-fits-all regulatory requirements necessitate difficult decisions on our part: diverting our ministry’s limited resources toward ensuring compliance rather than assisting families in need.

Our advocacy efforts were able to put this important matter before Congress and the CFPB for consideration as Dodd-Frank home mortgage reforms move forward.

Learn more about Habitat’s advocacy work and how you can get involved today.