The CFPB has proposed to delay the mandatory compliance date for the new general qualified mortgage (QM) rule that amends the Regulation Z ability to repay/QM rule from July 1, 2021 to October 1, 2022. As previously reported, in December 2020, a little over a month before former Director Kraninger resigned, the CFPB issued two final QM rules. One rule creates the new general QM based on an annual percentage rate (APR) limit to replace the original general QM based on a strict 43% debt-to-income (DTI) ratio limit. The other final rule creates a new seasoned loan QM. Both rules became effective on March 1, 2021. Comments on the proposal are due by April 5, 2021.
Currently, lenders may use the original 43% DTI QM, the new general QM based on an APR limit, and the temporary QM based on a loan being eligible for sale to Fannie Mae or Freddie Mac, which is commonly referred to as the “GSE Patch,” for applications received before July 1, 2021, and only the new general QM would be available for applications received on or after that date. If the mandatory compliance date of the new general QM rule is extended to October 1, 2022, all three QMs will be available for applications received before that date. In announcing the proposal to delay the mandatory compliance date for the new general QM, the CFPB made the following statement:
The COVID-19 pandemic has left almost 3 million American homeowners behind on their mortgages. Black and Hispanic communities, in particular, have still not recovered from the impact of the Great Recession and bear the heaviest burden of job losses under COVID-19. Forbearance plans and foreclosure moratoriums have helped many homeowners stay in their homes, but those interventions may end before either the broader economy has recovered from the impact of the pandemic or the housing market has reached a new equilibrium. The CFPB believes that an extension of the mandatory compliance date may help ensure stability and access to affordable, responsible credit in the mortgage market.
As previously reported, in late February 2021, the CFPB issued a policy statement advising that it would not delay the March 1, 2021 effective date of the new general QM rule or the seasoned loan QM rule, and that it:
- Expects to issue shortly a proposed rule that would delay the July 1, 2021, mandatory compliance date for the new general QM rule;
- Will consider at a later date whether to initiate a rulemaking to reconsider other aspects of the new general QM rule; and
- Is considering whether to initiate a rulemaking to revisit the seasoned loan QM rule.
While the proposal provides for a delay of the mandatory compliance date for the new general QM rule, it does not include proposals to otherwise amend the rule, and does not address the fate of the seasoned loan QM rule.