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Small Bank Lending Opportunities with QM Rollback

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Rollback of QM Rules: A Boost for Small-Bank Lending


President Donald Trump has signed a historical lender regulatory-relief bill that has the potential to impact mortgage lending significantly. It is speculated that smaller banks and credit unions are the real winners in this incident.

Most credit unions and community banks will now have a much-liberated condition where they can stretch the limits of making loans set by the federal government. This bill, named Economic Growth, Regulatory Relief, and Consumer Protection Act, also shortly known as S. 2155, has expanded an exemption to the QM (Qualified Mortgage) rule to most credit unions and community banks. Before this bill, this exemption was only eligible for minor depository organizations.

Smaller credit unions and banks with assets lower than a billion can now stretch aspects of the QM rule in making loans. Previously, only the credit unions and banks with less than a billion in assets had this springiness. Around 3,800 credit unions in America will be eligible for this QM exemption. Many analysts have welcomed this change as very beneficial for the lending sector.

Even with the qualified exemption, small banks and credit unions are still strictly supervised by the appropriate regulatory boards to ensure the system remains safe and sound without any riskier moves. Due to this bill, more and more small banks and credit unions are expected to increase their mortgage lending activities.

This new flexibility to the qualified mortgage encourages the growth of mortgage lending. This bill is also considered a measure to avoid any financial crisis that happened a few years ago. The federal and state banking regulatory authorities still supervise small banks and credit unions.


This is the beginning of President Trump’s deregulation efforts for financial institutions. The administration has already announced plans to roll back a host of Obama-era regulations, including those put in place by the Consumer Financial Protection Bureau (CFPB).

These changes will be an opportunity for smaller banks and credit unions struggling with lending restrictions imposed by CFPB rules. It is too soon to tell how these new regulatory relief measures will impact mortgage lending, but small bank lending could see some real growth.

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