In considering the public comments it received, the CFPB decided to loosen up on a couple of its proposals. As the GSE Patch’s expiration date (January 10, 2021) loomed, the CFPB promised to rethink the 43% DTI requirement and provide for a smooth and orderly transition to a post-Patch QM. Since 2014, in general terms, a closed-end residential mortgage loan could only constitute a QM if the borrower’s DTI did not exceed 43%, or if the loan were GSE-eligible. The CFPB otherwise recently issued a separate final rule, confirming once and for all that the GSE Patch – a temporary QM category for loans eligible for purchase by Fannie Mae or Freddie Mac – would expire on the mandatory compliance date of the agency’s rule revising the general QM definition. Second, the CFPB will begin allowing loans to season into a QM after 36 months of timely payments, so long as the loan is not sold more than once (and is not securitized) during that time. Mortgage lenders can opt in to the new QM as early as 60 days after the rule is published (so, likely by late February 2021), although compliance becomes mandatory July 1, 2021. First, along with ditching a debt-to-income ratio (“DTI”) ceiling, the agency expanded its proposed general Qualified Mortgage (“QM”) to include loans up to 2.25 percentage points over the average prime offer rate. WBK covered Fannie Mae’s and Freddie Mac’s guidance on the changes to loan eligibility due to the Revised General QM Rule and the Amended PSPA here and here.The Consumer Financial Protection Bureau (“CFPB”) issued two relatively welcome surprises yesterday. However, the preamble to the final rule also notes that the CFPB “recognizes that the practical availability of the Temporary GSE QM loan definition may be affected by policies or agreements created by parties other than the Bureau, such as the Preferred Stock Purchase Agreements (PSPAs), which include restrictions on GSE purchases that rely on the Temporary GSE QM loan definition after July 1, 2021.” The GSEs have announced that pursuant to their PSPAs, to be eligible for purchase, loans with application dates on or after July 1, 2021, must qualify as Revised General QM Loans. Notably, the final rule also provides lenders the option of originating a QM loan meeting the requirements of the Temporary GSE (Patch) QM until the new mandatory compliance date, or until the GSEs exit conservatorship, if prior to such date. The Revised General QM Rule went into effect on March 1, 2021. In publishing the final rule, the CFPB states that “he Bureau is taking this action 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.” Although the final rule extends the Revised General QM Rule’s mandatory compliance date from July 1, 2021, to October 1, 2022, it does not change the Rule’s effective date. Note the final rule essentially adopts the CFPB’s proposed rule on this subject (see WBK’s coverage of the proposed rule here) with only minor, non-substantive changes. The final rule is effective on June 30, 2021. The lender may, if it chooses, comply with either the original General QM loan definition (requiring, among other factors, that a QM have a debt-to-income ratio not exceeding 43%, consistent with Appendix Q), or the Revised General QM loan definition (requiring, among other factors, a QM meet specified pricing thresholds). Accordingly, for covered transactions where a lender receives an application for a loan between March 1, 2021, and Octoand seeks to originate a QM loan, the lender will have two options. On April 27, 2021, the CFPB published a final rule extending the mandatory compliance date for its December 2020 final rule revising the General Qualified Mortgage (QM) requirements (Revised General QM Rule).
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |