The Consumer Financial Protection Bureau (CFPB) has announced the delay of the mandatory compliance date [1] of the General Qualified Mortgage (QM) final rule [2], moving it from July 1, 2021 to October 1, 2022. The CFPB states that in delaying the compliance date, access to responsible, affordable mortgage credit will be preserved by those impacted by the COVID-19 pandemic.
“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 General QM final rule protects homeowners from debt traps and unaffordable, irresponsible mortgage lending. 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. Delaying the mandatory compliance date of the General QM final rule allows lenders more time to offer QM loans based on the homeowners’ debt-to-income (DTI) ratio, and not solely based on certain pricing thresholds. Delaying the compliance date would also give lenders more time to use the Government-Sponsored Enterprise (GSE) Patch [3], which provides QM status to loans that are eligible for sale to Fannie Mae or Freddie Mac.
Today’s announcement by the CFPB is the latest in a series of measures geared toward consumer protection during the pandemic.
The CFPB recently issued an interim final rule [4] in support of the Centers for Disease Control and Prevention (CDC)’s eviction moratorium, which requires debt collectors to provide written notice to tenants of their rights under the eviction moratorium, and prohibits debt collectors from misrepresenting tenants’ eligibility for protection from eviction under the moratorium. The temporary eviction moratorium ordered by the CDC has been extended through June 30, 2021.
And with an estimated 2.25 million Americans currently in forbearance plans [5], the CFPB also proposed changes to help prevent impending foreclosure actions [6] as the emergency federal foreclosure protections are eventually set to expire.
The CFPB reports [6] that more homeowners are behind on their mortgages than at any time since 2010, the peak of the Great Recession. Nearly 1.7 million borrowers will exit forbearance programs in September and the following months, with many a year or more behind on their mortgage payments.