ARLINGTON, Va.—NAFCU has summarized the CFPB's final rules on the general qualified mortgage (QM) definition and seasoned QMs, outlining key provisions and their impacts on credit unions.
In its summary of the general QM definition rule, NAFCU noted:
- The temporary government-sponsored enterprise (GSE) patch will expire July 1, 2021 – the general QM rule's mandatory compliance date
- The final rule revises how a credit union must determine ability-to-repay (ATR) for a general QM loan by replacing the debt-to-income (DTI) threshold with a comparison of the loan’s annual percentage rate (APR) to the average prime offer rate (APOR) for a comparable transaction
- The rule keeps intact a separate threshold for a safe harbor QM and a rebuttable presumption QM
- Appendix Q is eliminated and the requirements that a lender must consider and verify are included in the regulations
New Category Summation
In a summary of the new category of seasoned QMs, NAFCU explained the specific details and requirements to qualify for a seasoned QM. While credit unions won't be able to originate temporary GSE patch loans after July 1, the seasoned QM loans can be used as a mechanism to continue lending to members who do not meet the general QM loan standard at consummation but have the requisite ATR, NAFCU said.
NAFCU also pointed out that while the new general QM definition can be used before the mandatory compliance date once the rule takes effect March 1, the seasoned QM cannot be adopted before it takes effect, also March 1.