CFPB Proposes to Extend Mandatory Compliance Date for New Qualifying General Mortgage | Ballard Spahr srl
CFPB proposed to postpone the mandatory compliance date for the new general rule of qualified mortgages (QM) which modifies the repayment capacity / QM rule of Regulation Z from July 1, 2021 to October 1, 2022. As stated previously, in December 2020, just over a month before the resignation of former director Kraninger, the CFPB published two final quality management rules. A rule creates the new general QM based on an annual percentage rate limit (APR) to replace the original general QM based on a hard limit of 43% debt-to-income ratio (DTI). The other final rule is creating a new seasoned loan QM. Both rules entered into force on March 1, 2021. Comments on the proposal are expected before April 5, 2021.
Currently, lenders can use the original 43% DTI QM, the new general QM based on an APR limit, and the temporary QM based on a loan that can be sold to Fannie Mae or Freddie Mac, commonly known as “GSE Patch”, for applications received before July 1, 2021, and only the new general QM would be available for applications received on or after that date. If the mandatory compliance date for the new general QM rule is extended until October 1, 2022, all three QMs will be available for requests received before that date. In announcing the proposal to postpone the mandatory compliance date for the new general QM, the CFPB made the following statement:
The COVID-19 pandemic has left nearly 3 million U.S. homeowners on their mortgages. Black and Hispanic communities, in particular, have still not recovered from the impact of the Great Recession and bear the heaviest burden of job losses under COVID-19. Forbearance plans and foreclosure moratoria have helped many homeowners stay in their homes, but these interventions could end before the economy as a whole has recovered from the impact of the pandemic or the housing market. housing has reached a new equilibrium. The CFPB believes that an extension of the mandatory compliance date can help ensure stability and access to affordable and responsible credit in the mortgage market.
As stated previously, at the end of February 2021, the CFPB issued a policy statement stating that it will not delay the effective date of March 1, 2021 of the new general rule for quality management or the rule for managing senior loans , and that it:
- Plans to publish soon a proposed rule that would delay the mandatory compliance date of July 1, 2021 for the new general quality management rule;
- Consider at a later date whether it is appropriate to initiate a regulation to reconsider other aspects of the new general rule of quality management; and
- Consider whether to initiate rule development to review the senior loan quality management rule.
Although the proposal provides for an extension of the mandatory compliance date for the new general quality management rule, it does not include proposals to change the rule otherwise and does not address the fate of the quality management rule. seasoned loan quality.