CFPB to delay and review the rules for qualifying mortgages | Goodwin


The Consumer Financial Protection Bureau (CFPB) issued a declaration February 23, 2021 regarding compliance timelines associated with Qualified Mortgage Regulations completed by former Director Kathleen Kraninger. In its statement, the CFPB said it could amend or revoke the Qualified Mortgage (QM) final rule and expects to issue a proposed rule that would delay the mandatory compliance date of July 1, 2021 for its final rule. general of QM. Both rules were due to go into effect this week.

As previously discussed by Lender Law Watch, the CFPB released a proposed rule to create a new category of loans called “seasoned” qualified mortgages (seasoned QMs). This new category of qualified mortgages would require loans to meet certain performance standards over a 36-month waiting period, after which the Seasonal QM loan would qualify for the safe harbor of compliance with repayment capacity requirements ( ATR) for housing mortgage origination under the Truth in Lending Act (TILA). The CFPB issued the Seasoned QM Final Rule December 10, 2020, and it was originally scheduled to come into effect on March 1, 2021.

The CFPB, however, “is now considering initiating rule-making to review the seasoned QM final rule.” If the CFPB decides to review the rule, “it expects it to examine in that regulation whether a potential rule revoking or modifying the Seasoned QM final rule should affect covered transactions for which a request has been received during of the period from March 1, 2021, until the date of entry into force of such a final rule.

In addition, the CFPB said in its statement that it “plans to issue shortly a proposed rule that would delay the mandatory compliance date of July 1, 2021 from General final rule for quality managementAlso released on December 10, 2020. QM’s General Final Rule relaxes certain underwriting requirements for a loan to achieve General Qualified Mortgage status, replacing the requirement for QM’s General Loans (i.e. – say that a consumer’s debt-to-income ratio (DTI) cannot exceed 43%) with a limit based on the pricing of the loan. The CFPB considered that the new general quality management final rule was a “more comprehensive and flexible measure of a consumer’s reimbursement capacity than DTI alone”.

According to its recent statement, lenders could use “either the current definition of General QM loan or the revised definition of General QM loan for applications received during the period from March 1, 2021 until the delayed mandatory compliance date. “.

The CFPB also said in its statement that the Temporary Government Sponsored Business (GSE) QM loan definition, commonly referred to as the “GSE patch,” will remain in effect until the new mandatory compliance date, or until that the GSEs leave the supervision before this date. Dated. The GSE patch exemption allowed lenders to achieve QM status for loans guaranteed by Fannie Mae and Freddie Mac even if they exceeded a 43% debt-to-income limit that was required by CFPB rules from 2013, but this provision was to expire this year.

CFPB did not give details of specific changes it might consider to the Seasoned Quality Management Final Rule or the Final Quality Management General Rule. It remains to be seen how the new leadership of CFPB will impact the changes to these rules.

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