CFPB puts brakes on new QM rule

(March 5, 2021) The mandatory compliance date of the general qualified mortgage (QM) final rule would be delayed 15 months (from July 1 to Oct. 1, 2022) under a proposal issued this week by CFPB.

In a release, the agency said it has issued a notice of proposed rulemaking (NPRM) to delay the rule, which was only finalized in December under former Director Kathleen Kraninger.

Under the previous rule, the requirement for general QM loans was that the borrower’s debt-to-income ratio (DTI) not exceed 43% with a new requirement of a limit based on the loan’s pricing. Under the new rule adopted in December, which was slated to take effect July 1 but is proposed to be delayed to next year, a price-based approach was installed for limiting lending in replacement of the specific 43% DTI limit after determining that a loan’s price is a strong indicator of a consumer’s ability to repay.

CFBP Acting Director Dave Uejio, in a release, stated that extending the compliance date will ensure that homeowners struggling with the financial impacts of the COVID-19 pandemic have the options they need.

At a time when so many consumers are struggling and at risk of losing ground, particularly Black and Hispanic consumers, we need to do all we can to help people stay in their homes and to ensure the availability of responsible, affordable mortgages,” Uejio said. “In proposing to extend the date by which lenders must comply with the CFPB’s new General QM definition, we are working to provide needed options for both homeowners and lenders during a time of uncertainty and hardship.”

The agency also said extending the mandatory compliance date of the general QM final rule would allow lenders more time to offer QM loans based on the homeowners’ debt-to-income (DTI) ratio, and not solely based on a pricing cut-off.

Extending the compliance date of the General QM final rule would also give lenders more time to use the GSE Patch, which provides QM status to loans that are eligible for sale to Fannie Mae or Freddie Mac,” CFPB said.

CFPB noted that if the proposal is finalized, a number of things would remain in place. That is: the old, DTI-based general QM definition; the new, price-based General QM definition; and the GSE Patch (unless the GSEs exit conservatorship prior to Oct. 1, 2022) would all remain available as long as the lender received the consumer’s application prior to Oct. 1, 2022.

Comments on the proposal are due April 5.

CFPB Proposes Delay of Mandatory Compliance Date for General Qualified Mortgage Final Rule