Bureau moves QM final rule compliance date to Oct. 1, 2022; cites ‘more time’ to offer loans based on DTI

Compliance with a final rule on “qualified mortgages” (QMs) is delayed to Oct. 1, 2022, the federal consumer financial protection agency said Tuesday, asserting that the delay would allow lenders more time to offer the loans based on homeowners’ debt-to-income (DTI) ratios and not only on certain pricing thresholds.

The delay announced by the Consumer Financial Protection Bureau (CFPB) changes the mandatory compliance date from July 1 of this year to the Oct. 1 date of next year. The pause on the compliance date is part of a final rule the CFPB is calling the “April 2021 Amendments to the ATR/QM Rule.” ATR stands for “ability to repay.”

In a release, the CFPB said the action was made to “help ensure access to responsible, affordable mortgage credit, and preserve flexibility for consumers affected by the COVID-19 pandemic and its economic effects.”

CFPB Acting Director Dave Uejio, in a statement, said the agency’s actions were intended to ensure that “responsible, affordable mortgages remain available” to those consumers affected by the coronavirus crisis and its financial impact. “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,” he said.

The bureau also asserted that delaying the QM compliance date by more than a year would give lenders more time to use the government-sponsored enterprise (GSE) “patch.” The agency said that patch provides QM status to loans that are eligible for sale to GSE mortgage companies Fannie Mae or Freddie Mac. “The availability of the GSE Patch after July 1, 2021 may be limited by recent revisions to the Preferred Stock Purchase Agreements entered into by the Department of the Treasury and the Federal Housing Finance Agency,” the bureau noted.

According to an executive summary of its final rule issued Tuesday, the CFPB said that while the April 2021 final rule extends the general QM final rule’s mandatory compliance date, the effective date of the QM rule remains March 1, 2021.

The summary notes that for mortgage applications on the effective date (or after) – but before the new mandatory compliance date of Oct. 1, 2022 – lenders have the option of complying with either the revised, price-based general QM loan definition or the original, total monthly DTI-based general QM loan definition.

Only the revised, price-based general QM loan definition is available for applications received on or after the Oct. 1, 2022, mandatory compliance date, the summary states.

The summary also notes that the rule announced Tuesday sets the expiration date for the temporary GSE QM loan definition to Oct. 1, 2022, as well – or the date that the applicable GSE exits conservatorship, whichever comes first. In October, the bureau said it would extend the patch until a final rule was approved amending the general QM loan definition.

Qualified Mortgage Definition under the Truth in Lending Act (Regulation Z): General QM Loan Definition; Delay of Mandatory Compliance Date

 

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