On February 23, the Consumer Financial Protection Bureau (CFPB) issued a statement that it planned to propose a rule to “delay the July 1, 2021 mandatory compliance date of the General QM Final Rule.” Consistent with that, the CFPB announced a notice of proposed rulemaking (NPRM) on March 3, which would push back the current mandatory compliance date for the General Qualified Mortgage (QM) Final Rule to October 1, 2022. This would significantly extend the “GSE patch” and may be a sign of more things to come.
As discussed more fully in a prior post, the General QM Final Rule was created to address the expiration of the GSE patch, which permits certain mortgage loans eligible for purchase or guarantee by Fannie Mae and Freddie Mac (GSEs) to qualify as QM loans despite not meeting all requirements of the General QM loan definition. It does this by removing a 43% debt-to-income (DTI) limit contained in the General QM loan definition and replaces it with a price-based threshold approach.
Under the General QM Final Rule, which became effective on March 1, lenders can still use the old General QM loan definition or the GSE patch to originate QM loans where the loan application was received before July 1, 2021. The proposed rule would make this the case until October 1, 2022. The CFPB believes, in light of the current financial difficulties created by the COVID-19 pandemic, the extension “may help ensure stability and access to affordable, responsible credit in the mortgage market.”
Since assuming the reigns of the agency, Acting Director Dave Uejio has made it clear that the CFPB will assume a more proactive and assertive role. Consistent with this, the CFPB indicated in its February statement that it is still considering whether to “initiate another rulemaking to reconsider other aspects of the General QM Final Rule.” In a similar manner, the CFPB indicated it’s also considering whether to initiate a rulemaking to amend or revoke the recently enacted Seasoned QM Final Rule.
Overall, lenders should expect to see more developments regarding the recently enacted General and Seasoned QM Final Rules. The CFPB is accepting comments on the NPRM until April 5.