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ARTICLE · 14 DECEMBER 2020

CFPB Issues New QM Definition And Seasoning Provisions

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The Consumer Financial Protection Bureau ("CFPB") issued two relatively welcome surprises yesterday. First, along with ditching a debt-to-income ratio ("DTI") ceiling...

United StatesFinance and Banking
Kristie D. Kully
Kristie D. Kully
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The Consumer Financial Protection Bureau ("CFPB") issued two relatively welcome surprises yesterday. First, along with ditching a debt-to-income ratio ("DTI") ceiling, the agency expanded its proposed general Qualified Mortgage ("QM") to include loans up to 2.25 percentage points over the average prime offer rate. Mortgage lenders can opt in to the new QM as early as 60 days after the rule is published (so, likely by late February 2021), although compliance becomes mandatory July 1, 2021. Second, the CFPB will begin allowing loans to season into a QM after 36 months of timely payments, so long as the loan is not sold more than once (and is not securitized) during that time.

The CFPB otherwise recently issued a separate final rule, confirming once and for all that the GSE Patch - a temporary QM category for loans eligible for purchase by Fannie Mae or Freddie Mac - would expire on the mandatory compliance date of the agency's rule revising the general QM definition.

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