Input on a consumer bureau advance notice of proposed rulemaking (ANPR) on potential changes to the definition of “qualified mortgage” (QM) in light of the planned expiration of a temporary QM category for agency loans will be due on or about Sept. 14 under a Federal Register notice scheduled to publish Wednesday.
The ANPR, announced July 25 by the Consumer Financial Protection Bureau (CFPB), seeks input on whether a measure of a consumer’s finances – such as the 43% debt-to-income ratio cap now required for the general QM safe harbor – is needed in the factors present to show a lender has exercised a reasonable, good-faith effort to ensure the borrower will be able to repay the loan. The temporary QM category – known also as the “GSE patch” – does not impose a DTI cap for loans eligible for purchase or guarantee by government-sponsored enterprises Fannie Mae or Freddie Mac. The GSE patch is set to expire Jan. 10, 2021. The bureau says it plans to let this provision expire, though a brief extension could be provided for transition purposes only.
The QM/ATR (ability to repay) requirements are included in Regulation Z, implementing the Truth in Lending Act (TILA). TILA was amended to address the borrower’s ability to repay a mortgage loan by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank).