CFPB suggests postponing the mandatory compliance deadline for a new generally qualified mortgage
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The CFPB has proposed to postpone the mandatory compliance date for the new QM rule (General Qualified Mortgage), which changes the repayment / QM rule of Regulation Z from July 1, 2021 to October 1, 2022. As previously reportedIn December 2020, a little more than a month before the resignation of the former director Kraninger, the CFPB issued two final QM rules. One rule creates the new general QM based on an annual percentage threshold (APR) to replace the original general QM based on a strict debt to income (DTI) ratio of 43%. The other last rule creates a new QM for experienced loans. Both rules came into force on March 1, 2021. Comments on the proposal are due by 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 is eligible for sale to Fannie Mae or Freddie Mac, commonly referred to as “GSE” “Patch” is used for applications received before July 1, 2021, and only the new general QM would be available for applications received on or after this date. October 2022, all three QMs will be available for applications received before this date. When 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 American homeowners on their mortgages. The Black and Hispanic communities in particular have still not recovered from the effects of the Great Recession and are bearing the heaviest burden of job loss under COVID-19. Forbearance plans and foreclosure moratoriums have helped many homeowners stay in their homes, but these interventions can end before either the overall economy has recovered from the effects of the pandemic or the property market has reached a new equilibrium. The CFPB believes that extending the mandatory compliance date can help ensure stability and access to affordable, responsible credit in the mortgage market.
As previously reportedAt the end of February 2021, the CFPB issued a policy statement in which it indicated that the date of entry into force of the new general QM rule or the QM rule for experienced loans would not be delayed on March 1, 2021 and that:
- Expects to publish a proposed rule shortly that will delay the mandatory compliance deadline for the new general QM rule on July 1st, 2021;
- Will consider at a later point in time whether rule-setting should be initiated in order to reconsider other aspects of the new general QM rule. and
- Considering whether a rule should be introduced to rethink the QM rule for experienced loans.
While the proposal provides for a delay in the mandatory compliance date for the new general QM rule, it does not contain any suggestions for changing the rule in any other way and does not address the fate of the QM rule for experienced credits.
The content of this article is intended to provide general guidance on the subject. A professional should be obtained about your particular circumstances.
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