Revising – or revoking – ‘seasoned QM’ rule under consideration

(Feb. 26, 2021) Revoking or revising the “seasoned” qualified mortgage (QM) final rule issued in December is under consideration by CFPB, according to a statement issued this week by the bureau.

The agency, in that statement (circulated along with a notice of small-entity compliance guide updates), also said it was looking at whether to delay the July 1 mandatory compliance date for the December final rule on the general QM loan definition. Both rules, which created a “seasoned” QM loan definition and revised the existing QM loan definition – now called the general QM definition – are set to take effect March 1, with mandatory compliance generally set for July 1. But that July date may be tentative, according to the statement.

The new seasoned QM and general QM definitions in those rules also replaced the debt-to-income (DTI) ratio ceiling as a QM factor, instead using performance requirements and a pricing component, respectively.

In its statement, the bureau said that if it decides to revisit the seasoned QM rule, it expects to consider in that rulemaking whether any potential final rule revoking or amending seasoned QM should affect covered transactions for which an application was received during the period from March 1, 2021 until the effective date of such a final rule.

In the meantime, the agency said, it expects to issue a proposal that would delay the July 1 mandatory compliance date of the general QM rule. According to the bureau, if a delay is finalized, creditors would be able to use either the current general QM loan definition or the revised general QM loan definition for applications received during the period from March 1, 2021, until the delayed mandatory compliance date.

Furthermore, the Bureau anticipates that the Temporary GSE QM loan definition will remain in effect until the new mandatory compliance date, in accordance with the October 20, 2020 final rule described above, except that the Temporary GSE QM loan definition would expire with respect to a GSE if that GSE ceases to operate under conservatorship prior to the new mandatory compliance date.”

Other rulemakings to reconsider other aspects of the general QM final rule are possible too, the agency signalled.

Statement on Mandatory Compliance Date of General QM Final Rule and Possible Reconsideration of General QM Final Rule and Seasoned QM Final Rule