On April 27, the Bureau of Consumer Financial Protection (CFPB) issued a final rule to delay the mandatory compliance date for the General QM Final Rule until October 1, 2022. The CFPB stated that it issued the rule “to help ensure access to responsible, affordable mortgage credit and to preserve flexibility for consumers affected by the COVID-19 pandemic and its economic effects.” The mandatory compliance was originally set for July 1.
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. Details concerning the new General QM Final Rule can be found here.
As a result of the new rule, lenders can continue to originate QM loans using the old general QM loan definition for loans with an application received date before October 1, 2022. Additionally, the GSE patch will continue to exist until October 1, 2022.
This rule, however, may prove of little effect. As explained by Fannie Mae in Lender Letter LL-2021-09 and Freddie Mac in Bulletin 2021-13, the GSEs will generally only purchase loans originated on or after July 1 if they conform to the requirements of the General QM Final Rule. Furthermore, because loans must conform to the new General QM Final Rule to be eligible for purchase by the GSEs, the GSE patch will effectively cease on July 1 to provide an alternative means for lenders to originate a QM loan.
Considering the CFPB’s announcement in February that it intended to review the General QM Final Rule, there has been speculation that the CFPB may be buying time to amend or repeal the General QM Final Rule, which was issued under the Trump administration. Regardless, lenders should continue to monitor both the actions of the GSEs and the CFPB for future developments regarding the General QM Final Rule.