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). Accordingly, for covered transactions where a lender receives an application for a loan between March 1, 2021, and October 1, 2022 and seeks to originate a QM loan, the lender will have two options. 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). The final rule is effective on June 30, 2021.
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. In publishing the final rule, the CFPB states that “[t]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. The Revised General QM Rule went into effect on March 1, 2021.
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. 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. 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.