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ARTICLE · 21 JANUARY 2020

CFPB On QM — No DTI? Short-Lived Patch Extension?

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According to the Mortgage Bankers Association, the Consumer Financial Protection Bureau intends to revise its Qualified Mortgage definition

United StatesFinance and Banking
Kristie D. Kully
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Paul Jorissen
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According to the Mortgage Bankers Association, the Consumer Financial Protection Bureau intends to revise its Qualified Mortgage definition by moving away from a debt-to-income ratio threshold, and instead adopting a different test, such as one based on the loan's pricing. The CFPB also apparently indicated it may extend, for a short time, the temporary QM status for loans eligible for purchase by Fannie Mae or Freddie Mac (the "Patch").

The MBA reports that CFPB Director Kathy Kraninger informed Congress of the agency's plans for its highly-anticipated QM rulemaking, expected this spring (by late May, but perhaps earlier). In July of last year, the CFPB issued an advance notice of proposed rulemaking to begin addressing the Patch expiration (scheduled for January 2021). For the past five years, the Patch has resulted in a significant presence by the government-controlled enterprises in connection with higher-DTI loans (i.e., those over 43%). The CFPB has insisted it

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