Delay in QM rule examined in summary

(March 12, 2021) NASCUS also this week published a summary of CFPB’s proposal to delay the general “qualified mortgage” loan proposal, which would push the mandatory compliance date back by 15 months to Oct. 1, 2022.

The summary is available to members only.

Last week, the bureau issued the notice of proposed rulemaking (NPRM) to delay the rule, which was only finalized in December. Under the previous rule (the one on the books before the December rule was finalized), the requirement for general QM loans was that the borrower’s debt-to-income ratio (DTI) not exceed 43%.

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.

Acting Director Uejio said last week that extending the compliance date would ensure that homeowners struggling with the financial impacts of the COVID-19 pandemic have the options they need.

The agency 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.

NASCUS summary: Proposal to Delay the Mandatory Compliance Date of QM Definition Final Rule (members only)