Summary outlines complex ‘seasoned QM’ rule

(Feb. 12, 2021) The new “seasoned qualified mortgage” (QM) from CFPB is the focus of the latest summary published by NASCUS and now available on the association’s website (to members only).

The rule was finalized by the agency in December. It takes effect March 21, but its mandatory compliance date is not until July 1.

The “seasoned QM” rule, the CFPB said then, creates a new category for first-lien, fixed-rate covered transactions that have met certain performance requirements, are held in portfolio by the originating creditor or first purchaser for a 36-month period, comply with general restrictions on product features and points and fees, and meet certain underwriting requirements.

A loan becomes eligible as a seasoned QM, the bureau stated, when it is a first-lien, fixed-rate loan with no balloon payments and meets certain other product restrictions. As under the general QM final rule, the bureau said, the creditor must also consider the consumer’s debt-to-income (DTI) ratio or residual income, income or assets other than the value of the dwelling, and debts “and verify the consumer’s income or assets other than the value of the dwelling and the consumer’s debts.”

The loan must also “season” by meeting certain performance requirements at the end of the seasoning period, CFPB said. Specifically, according to the bureau, the loan can have no more than two delinquencies of 30 or more days and no delinquencies of 60 or more days at the end of the seasoning period. The creditor or first purchaser also generally must hold the loan in portfolio until the end of the seasoning period.

Summary: CFPB Seasoned Qualified Mortgage Loan Final Rule