RSSThe Consumer Financial Protection Bureau issued a final rule to extend the Government-Sponsored Enterprise patch until the mandatory compliance date of a final rule amending the General Qualified Mortgage loan definition in Regulation Z.
The GSE patch, currently set to expire January 10, will still cease if Fannie Mae and Freddie Mac exit conservatorship. Finalization of the amended QM definition in Reg Z isn’t expected until April 21 of next year at the earliest, the bureau has said.
The CFPB proposed ending the current debt-to-income requirements behind qualified mortgage status under the Truth in Lending Act’s ability-to-repay requirements in June. It plans to replace the DTI requirements of the general QM definition in Regulation Z with a price-based approach.
The bureau had previously issued a rule that established a general QM standard for loans where the consumer’s DTR ratio is 43 percent or less and the loan meets the other statutory QM requirements.
Under the GSE patch, loans are eligible for QM status even if the DTI ratio exceeds 43 percent. Its expiration would affect about 957,000 mortgage loans which would either not be made or made at a higher price, the CFPB said.
“The GSE patch’s expiration will facilitate a more transparent, level playing field that ultimately benefits consumers through promoting more vigorous competition in mortgage markets,” said CFPB Director Kathleen Kraninger. “The bureau is committed to ensuring a smooth and orderly mortgage market throughout its consideration of these issues and any resulting transition away from the GSE patch.”
