It’s official: QM rule compliance delayed until October 2022

After short comment period, CFPB moves ahead with controversial action

The Consumer Financial Protection Bureau formally delayed the mandatory compliance date of the General Qualified Mortgage final rule – better known as the QM rule – from July 1, 2021 to October 1, 2022 on Tuesday. This follows the bureau’s notice of proposed rulemaking on the issue on March 4.

“So many consumers have been hit hard by the pandemic and the economic downturn, and we want to ensure that responsible, affordable mortgages remain available,” said CFPB Acting Director Dave Uejio. “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.”

The bureau just issued its final rulings on QM in December, establishing a pricing threshold that effectively replaced the debt-to-income limit of 43% with a price-based approach that gives lenders relief for loans capped at 150 basis points above the prime rate. Today’s action means that lenders have more time to offer QM loans based on the homeowners’ DTI, and more time to use the GSE Patch, which provides QM status to loans that are eligible for sale to Fannie Mae or Freddie Mac.

The bureau did note that “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.

In Lender Letters issued on April 8, Fannie Mae and Freddie Mac confirmed that loans purchased by the GSEs with application dates on and after July 1 must meet the QM standards set forth in December. The directive laid out in their amended Preferred Stock Purchase Agreements with the Treasury Department forbid Fannie and Freddie from buying QM loans under the GSE Patch.

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Several prominent trade groups expressed their concern about delaying the QM rule during the short comment period offered by the CFPB.

The Housing Policy Council sent a letter to the CFPB on March 30 expressing its opposition to delaying the implementation of the Final QM Rule. The HPC letter outlined why it opposes delaying the implementation of the Final QM Rule, including:

  • The 2020 General QM Rule resulted from an extensive and disciplined rulemaking process that reflects the thorough analysis and public input required under the Administrative Procedure Act;
  • The Bureau has not provided a sufficient rationale for delaying implementation, given the more expansive access to credit provided under the 2020 General QM Rule relative to the 2013 QM Rule;
  • The benefits of implementing the 2020 General QM Rule outweigh the benefits of delaying expiration of the 2013 QM Rule, as evidenced by the Bureau’s data and analysis; and
  • Delayed expiration of the 2013 QM Rule, in order to facilitate reconsideration of the 2020 General QM Rule, is not in the public interest.

The trade organization’s letter states: “We also are concerned that the Proposed Rule’s real purpose is to set the stage for the Bureau to reopen the 2020 General QM Rule. We firmly believe that reopening the 2020 General QM Rule would not be in the public interest.”

David Stevens, former CEO of the Mortgage Bankers Association who also served as senior vice president of single family at Freddie Mac, executive vice president at Wells Fargo Home Mortgage, president and COO of the Long and Foster Realty Companies, assistant secretary of Housing and FHA Commissioner, wrote a scathing opinion piece outlining his opposition to the move.

“This act poses serious risk to mortgage finance and brings potential downstream legal risk to the industry. With the mandatory date on hold, it leaves open the opportunity to re-litigate the work that has taken over two years to date. The Bureau will have more options to tinker with the General QM rule — without starting the whole process over again with an ANPR.”

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