On April 27, 2021, the Consumer Financial Protection Bureau (CFPB or Bureau) issued a final rule formally delaying the mandatory compliance date for the rule defining an “qualifying mortgage” (QM) (the general final rule of QM) from from July 1, 2021. to October 1, 2022.
We have already reported on this mortgage regulation which was finalized by the Bureau at the end of last year. The general final rule of quality management greatly simplifies the definition of quality management by replacing the original general lending definition of quality management (centered on the requirement that the debt-to-income ratio (DTI) consumer rate does not exceed 43%) by a loan-based limit. pricing. The rule was published in the Federal Register December 29, 2020, with an effective date of March 1, 2021 (although the rule contains an initial mandatory compliance date of July 1, 2021). We have also previously reported on the Office statement of February 23, 2021 which provided an update and more specific guidance regarding the current and future plans of the Office regarding quality management rules.
In accordance with the February 23 statement, the Bureau issued a rule proposal on March 3 to extend the mandatory compliance date of the General Quality Management Final Rule from July 1, 2021 to October 1, 2022 (which we also have already reported). The CFPB has now adopted the previous rule proposal.
For applications received on or after March 1, 2021, but before the mandatory compliance date of October 1, 2022, creditors seeking to provide General GQ loans have the option of complying with the revised definition of General GQ loan based on price. or the initial and total monthly general QM loan definition based on the DTI. In addition, the final rule affects the expiration of the temporary GSE QM loan definition or “Patch,” which is a temporary QM definition that also gives QM status to certain mortgages eligible for purchase or guarantee by the ‘either GSE (Fannie Mae or Freddie Mac). According to the final rule, the definition of temporary GSE QM loan will expire on October 1, 2022, or the date on which the relevant GSE leaves the trusteeship, whichever occurs first. However, only the revised, price-based general GQ loan definition will be available for applications received on or after October 1, 2022, which is a mandatory compliance date.
The final rule comes into effect on June 30, 2021.
To take away
- It is important to note that although this Final Rule postpones the mandatory compliance date of the General QM Final Rule, it does not change the effective date of the General QM Final Rule (the General Final Rule of the QM entered into force on March 1, 2021).
- As the Bureau itself acknowledges, the future impact of this delay on access to credit is subject to uncertainty. The practical availability of the temporary GSE QM loan definition after July 1, 2021 may be significantly affected by policies or agreements created by parties other than the Bureau, such as recent revisions to Preferred Share Purchase Agreements (PSEAs). ) entered into by the United States. Department of the Treasury and the Federal Housing Finance Agency, which include restrictions on GSE purchases that are based on the GSE QM temporary loan definition after July 1, 2021. These changes may prevent GSEs from purchasing loans on the basis of the definition of temporary GSE QM loan after July 1, 2021, and can therefore significantly limit the impact of the delay in the mandatory compliance date, in the absence of revisions to the agreements. A delay in the mandatory compliance date may not provide additional time for implementation because, in light of the PSPAs, creditors would likely have to comply with the revised general definition of the price-based QM loan to sell. their loans to GSEs as of July 1, 2021. It remains to be seen whether, and if so, how many loans covered by the GSE QM temporary loan definition will also be covered by the revised QM general loan definition based on price.
- The Bureau concluded that maintaining flexibility to respond to the effects of the pandemic, by postponing the mandatory compliance date to October 1, 2022, outweighs fears that a postponement of the mandatory compliance date could stifle development. private sector approaches to underwriting or underwriting. a rebound in the private market excluding GSE in the short term. It remains to be seen, however, how the mortgage market reacts once the practical availability of the GSE QM temporary loan definition is severely limited on July 1, 2021.
- This last rule does not make any other changes to the general definition of the QM loan. The Bureau stated that it plans to assess the changes made by the general final rule on quality management to the general definition of quality management loan and that it will consider at a later date whether there is Another regulation should be launched to reconsider other aspects of the general final rule of quality management. That said, the lingering uncertainty about a possible reconsideration of the revised definition of the general GQ loan based on prices may ultimately deter some creditors from implementing the revised definition of the general GQ loan.