WASHINGTON—The Consumer Financial Protection Bureau has released a notice of proposed rulemaking to delay the mandatory compliance date of the General Qualified Mortgage (QM) final rule from July 1, 2021, to October 1, 2022. NAFCU issued a statement supporting the delay.
The CFPB is proposing to extend the compliance date to ensure homeowners struggling with the financial impacts of the COVID-19 pandemic have the options they need, the agency said.
“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. 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. 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 (DTI) 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, the CFPB said.
“The COVID-19 pandemic has left almost three million American homeowners behind on their mortgages. Black and Hispanic communities, in particular, have still not recovered from the impact of the Great Recession and bear the heaviest burden of job losses under COVID-19. Forbearance plans and foreclosure moratoriums have helped many homeowners stay in their homes, but those interventions may end before either the broader economy has recovered from the impact of the pandemic or the housing market has reached a new equilibrium. The CFPB believes that an extension of the mandatory compliance date may help ensure stability and access to affordable, responsible credit in the mortgage market,” the agency said.
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.
Comments on the NPRM must be received on or before April 5, 2021.
To read the NPRM click here.
NAFCU Response
"NAFCU thanks the CFPB for listening to our concerns and extending the compliance date for the general QM final rule. The extension will ensure homeowners continue to have access to mortgage credit during the pandemic and provide credit unions with additional time to comply,” said NAFCU Executive Vice President of Government Affairs and General Counsel Carrie Hunt. “The QM Patch has been a critical tool for credit unions as they assist their members, particularly those of low- and moderate-income, achieve homeownership and its extension is a benefit to all."