On August, 18, 2020, the CFPB issued a new proposed rule to create a new category of “seasoned qualified mortgages” (Seasoned QMs) that would receive the safe harbor conclusive presumption of meeting the Ability to Repay standard. The proposed rule would allow certain loans that meet specified criteria and are held in portfolio by the lender for three years to qualify as QMs. The Bureau stated that it believes “a Seasoned QM definition could complement existing QM definitions and help ensure access to responsible, affordable mortgage credit upon the expiration of one of the existing QM definitions.” The CFPB also stated that it believes the proposed rule will “encourage safe and responsible innovation in the mortgage origination market, including for certain loans that are not QMs or are only rebuttable presumption QMs under the existing QM categories,” and would provide more legal certainty as to loans made in accordance with other QM definitions.
Comments on the proposed rule are due within 30 days of the proposed rules’ publication in the Federal Register. A copy of the CFPB’s proposed rule can be found here.
The CFPB previously issued two proposed rules regarding QMs:
The Proposed Seasoned QM Rule
The new proposed Seasoned QM criteria are that the loan: