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CFPB Proposes Extending Mandatory Compliance Date for QM Loans

The Consumer Financial Protection Bureau (CFPB) is among the government agencies aiming to help those struggling during this unprecedented pandemic-prompted recession. A move by the CFPB Wednesday will help maintain affordability in mortgages and keep people in their homes, officials say.

The CFPB moves to delay the mandatory compliance date of the general qualified mortgage initially slated for July 1 to October 1.

The office says the extension would ensure homeowners struggling with the financial impacts of the COVID-19 pandemic have the options they need.

“At a time when so many consumers are struggling and at risk of losing ground, particularly Black and Hispanic consumers, we need to do all we can to help people stay in their homes and to ensure the availability of responsible, affordable mortgages,” said Bureau Acting Director David Uejio. “In proposing to extend the date by which lenders must comply with the CFPB’s new General QM definition, we are working to provide needed options for both homeowners and lenders during a time of uncertainty and hardship.”

The general QM final rule is part of the CFPB’s work to protect homeowners from debt traps and unaffordable, irresponsible mortgage loans, according to the bureau.

"Under the statute, QM loans are presumed to be made based on the lender’s reasonable determination of the homeowner’s ability to repay the loan," according to the CFPB. "Extending the mandatory compliance date of the general QM final rule would allow lenders more time to offer QM loans based on the homeowners’ debt-to-income ratio, and not solely based on a pricing cut-off. Extending the compliance date of the General QM final rule would also give lenders more time to use the GSE Patch, which provides QM status to loans that are eligible for sale to Fannie Mae or Freddie Mac."

In its press release, the CFPB refers to its first analysis earlier this week of the impacts of the COVID-19 pandemic on housing.

Bureau administrators say actions taken by both the public and private sector have, so far, prevented a devastating number of foreclosures during the height of the public health crisis. However, according to CFBP, as legal protections expire in the months ahead, more than 11 million families or almost 10% of U.S. households are at risk of eviction and foreclosure.

The CFPB said it believes that an extension of the mandatory compliance date may help ensure stability and access to affordable, responsible credit in the mortgage market.

If this NPRM is finalized as proposed, the old, DTI-based General QM definition; the new, price-based General QM definition; and the GSE Patch (unless the GSEs exit conservatorship prior to October 1, 2022) would all remain available as long as the lender received the consumer’s application prior to October 1, 2022," reported the CFPB.

Comments on the NPRM are due on or before April 5.

About Author: Christina Hughes Babb

Christina Hughes Babb is a reporter for DS News and MReport. A graduate of Southern Methodist University, she has been a reporter, editor, and publisher in the Dallas area for more than 15 years. During her 10 years at Advocate Media and Dallas Magazine, she published thousands of articles covering local politics, real estate, development, crime, the arts, entertainment, and human interest, among other topics. She has won two national Mayborn School of Journalism Ten Spurs awards for nonfiction, and has penned pieces for Texas Monthly, Salon.com, Dallas Observer, Edible, and the Dallas Morning News, among others. Contact Christina at christina.hughesbabb@thefivestar.com.
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