when does mandatory compliance of the new qm rule begin

#WHEN DOES MANDATORY COMPLIANCE OF THE NEW QM RULE BEGIN MANUALS#
#WHEN DOES MANDATORY COMPLIANCE OF THE NEW QM RULE BEGIN PATCH#

However, the agency apparently looked closely at rate spread and delinquency data and determined that a 2.25 percentage point spread “strikes the best balance between ensuring consumers’ ability to repay and ensuring continued access to responsible, affordable mortgage credit.” The final rule provides different thresholds for relatively small loans and/or subordinate-lien loans. The CFPB had proposed to use an APR rate spread of 2.0 percentage points over APOR. However, a creditor does not have to follow those safe harbor agency standards, so long as it complies with the rule’s obligation to verify the amounts on which it relies. Determining what constitutes a “substantially similar” version may lead to future headaches. If an agency updates its standards from the versions in the final rule, a creditor still may rely on the updated standards so long as they are substantially similar.

A creditor even may pick-and-choose among those agency standards.

#WHEN DOES MANDATORY COMPLIANCE OF THE NEW QM RULE BEGIN MANUALS#

However, the CFPB provides for a safe harbor if the creditor follows the verification standards in specified single-family underwriting manuals of Fannie Mae, Freddie Mac, the Federal Housing Administration, the Department of Veterans Affairs, or the Department of Agriculture. The final rule provides creditors significant flexibility and room for innovation in considering and verifying the factors described above. However, the rule retains the distinction between safe harbor and rebuttable presumption QMs, with the same 1.5 percentage point threshold. The final rule removes the 43% DTI threshold and the troublesome Appendix Q. The creditor has verified the consumer’s current or reasonably expected income or assets, debt obligations, alimony, and child support.The creditor has considered the consumer’s current or reasonably expected income or assets, debt obligations, alimony, child support, and DTI ratio or residual income and.The loan meets the existing QM product feature and underwriting requirements and limits on points and fees.The loan has an annual percentage rate (“APR”) that does not exceed the average prime offer rate (“APOR”) by 2.25 or more percentage points.Specifically, the new general QM and its compliance protection will apply, under the final rule, to a covered transaction with the following characteristics: In considering the public comments it received, the CFPB decided to loosen up on a couple of its proposals. As the GSE Patch’s expiration date (January 10, 2021) loomed, the CFPB promised to rethink the 43% DTI requirement and provide for a smooth and orderly transition to a post-Patch QM.

Since 2014, in general terms, a closed-end residential mortgage loan could only constitute a QM if the borrower’s DTI did not exceed 43%, or if the loan were GSE-eligible.

#WHEN DOES MANDATORY COMPLIANCE OF THE NEW QM RULE BEGIN PATCH#

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. 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. 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. 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. The Consumer Financial Protection Bureau (“CFPB”) issued two relatively welcome surprises yesterday.

When does mandatory compliance of the new qm rule begin