The Consumer Financial Protection Bureau formally delayed the mandatory compliance date of the General Qualified Mortgage final rule from July 1, 2021 to October 1, 2022.
This delay will “help ensure access to responsible, affordable mortgage credit, and preserve flexibility for consumers affected by the COVID-19 pandemic and its economic effects,” the agency said in a press release. The bureau originally proposed the move in March.
The move keeps intact the current 43 percent debt-to-income ratio ceiling as well as Fannie Mae and Freddie Mac’s GSE patch. The new QM rule, finalized under former CFPB director Kathy Kraninger, replaced the DTI ratio requirements with a price-based definition and also introduced a new category of “seasoned” loans.
The GSE patch, which extended QM status to loans sold to Fannie and Freddie, would have expired when the new rule went into effect in July. After expiration of the 2014 exemption, those loans would be subject to the same requirements as other QM loans.
“So many consumers have been hit hard by the pandemic and the economic downturn, and we want to ensure that responsible, affordable mortgages remain available,” said CFPB Acting Director Dave Uejio. “As the mortgage market navigates an uncertain and challenging time, extending the date by which lenders must comply with the CFPB’s new General QM definition will help provide options and flexibility for both lenders and borrowers.”
The CFPB noted, however, 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, which include restrictions on GSE purchases that rely on the Temporary GSE QM loan definition after July 1, 2021.” Fannie Mae and Freddie Mac announced earlier this month that, after July 1, they would only purchase loans which conformed to the QM final rule, effectively ending the GSE patch.
Sens. Mark Warner (D-Va.) and Tim Scott (R-S.C.) had asked the bureau to reconsider delaying the compliance date. The General QM final rule “strikes an appropriate balance between consumer protection and promoting the availability of responsible, affordable mortgage credit,” the pair wrote in a letter.
“The QM Final Rule is a comprehensive set of reforms that appropriately transitions us from the GSE Patch in a way that preserves access to responsible, affordable mortgage credit, prevents market disruption, and enhances regulatory certainty,” they said. “We urge the Bureau to allow the General QM Final Rule to proceed as intended and commit to a longer-term approach to monitoring the broader housing market implications of mortgage lending under the rule.”