We Previously reported on recent mortgage regulations that were finalized by the Consumer Financial Protection Bureau (CFPB or Bureau) at the end of last year. Of the Bureau’s two final rules, one dramatically simplifies the definition of an “qualifying mortgage” (QM) (the general QM final rule), and the other provides another route to QM safe-haven status. certain seasoned mortgages (the Seasoned QM Final Rule). These two final rules, which could have major impacts on the housing market, were published in the Federal Register December 29, 2020, with effective dates of March 1, 2021 (although the general quality management final rule contains a mandatory compliance date of July 1, 2021).
We have also Previously reported on the February 23 Office statement which provided a status update and more specific guidance regarding the Office’s current and future plans for these quality management rules.
In accordance with the February 23 statement, the Bureau issued a proposed rule March 3 to extend the mandatory compliance date of the QM General Final Rule from July 1, 2021 to October 1, 2022. The previously announced expiration of the GSE QM temporary loan definition (which covers loans eligible for purchase or guarantee by Fannie Mae or Freddie Mac (the GSEs), while operating under the trusteeship or receivership of the Federal Housing Finance Agency (FHFA)), would also be extended and, under the proposed rule, would now expire no earlier than October 1, 2022. or the date on which the GSE concerned leaves the supervision.
The Bureau states that its proposal to extend the mandatory compliance date is motivated by two main factors. First, the Bureau is looking to ensure that homeowners struggling with the financial impacts of the coronavirus pandemic (COVID-19) have the options they need. Second, the Bureau seeks to ensure stability and access to affordable and responsible credit in the mortgage market.
Comments on the proposed rule must be received no later than April 5, 2021.
The Bureau proposes that a final rule based on this proposal enter into force 60 days after its publication in the Federal Register. The Bureau anticipates that this would make the final rule effective before the current mandatory compliance date of July 1, 2021.
Take away food
- Under the proposal, the revised regulation would apply to covered transactions for which creditors receive a claim as of October 1, 2022. If the proposed rule is finalized as proposed, (a) the old definition of debt management general quality based on DTI; (b) the new general definition of QM based on prices; and (c) the GSE patch (unless the GSE leaves the guardianship by October 1, 2022) would remain available as long as the lender receives the consumer’s request by October 1, 2022. The rule would give lenders more time to offer QM loans based on homeowners’ debt-to-income ratio (DTI), not just a price threshold. In addition, extending the compliance date of the general quality management final rule would also give lenders more time to use the GSE fix, which grants quality management status to loans eligible for sale at Fannie Mae or Freddie Mac.
- The proposal is expected to help remove much of the uncertainty in the mortgage market over mortgage arrangements following the transitions of the Biden administration and CFPB leadership. Continuing to define the temporary GSE QM loan for now should also help prevent any potential market disruption.
- This proposal would not make any further changes to the general definition of the QM loan. The Bureau plans to assess the changes made by the general final rule of quality management to the definition of general loan of quality management and will consider at a later date whether to initiate another regulation to reconsider. other aspects of the general final rule of quality management.