Bureau moves QM final rule compliance date to Oct. ‘22

(April 30, 2021) Compliance with a final rule on “qualified mortgages” (QM) is delayed to Oct. 1, 2022, the CFPB said this week, asserting that the pause would allow lenders more time to offer the loans based on homeowners’ debt-to-income (DTI) ratios, and not only on certain pricing thresholds.

The delay, which changes the mandatory compliance date from July 1 of this year to the Oct. 1 date of next year, is part of a final rule the CFPB is calling the “April 2021 Amendments to the ATR/QM Rule.” ATR stands for “ability to repay.”

In a release, the bureau said the action was taken to “help ensure access to responsible, affordable mortgage credit, and preserve flexibility for consumers affected by the COVID-19 pandemic and its economic effects.”

“As the mortgage market navigates an uncertain and challenging time, extending the date by which lenders must comply with the CFPB’s new General QM definition will help provide options and flexibility for both lenders and borrowers,” CFPB Acting Director Dave Uejio said in a statement.

The bureau also asserted that delaying the QM compliance date by more than a year would give lenders more time to use the Government-Sponsored Enterprise (GSE) Patch, which has also been extended to Oct. 1 of next year – or until the date that the applicable GSE exits conservatorship, whichever comes first.  The agency said the GSE patch provides QM status to loans that are eligible for sale to GSE mortgage companies Fannie Mae or Freddie Mac. “The availability of the GSE Patch after July 1, 2021 may be limited by recent revisions to the Preferred Stock Purchase Agreements entered into by the Department of the Treasury and the Federal Housing Finance Agency,” the bureau noted.

According to an executive summary of its final rule issued Tuesday, the CFPB said that while the April 2021 final rule extends the general QM final rule’s mandatory compliance date, the effective date of the QM rule remains March 1, 2021.

The summary notes that for mortgage applications on the effective date (or after) – but before the new mandatory compliance date of Oct. 1, 2022 – lenders have the option of complying with either the revised, price-based general QM loan definition or the original, total monthly DTI-based general QM loan definition.

Only the revised, price-based general QM loan definition is available for applications received on or after the Oct. 1, 2022 mandatory compliance date, the summary states.

Qualified Mortgage Definition under the Truth in Lending Act (Regulation Z): General QM Loan Definition; Delay of Mandatory Compliance Date