CFPB Delays QM Rule Compliance and Patch Demise

Lenders will have more than an additional year to comply with the General Qualified Mortgage (QM) Rule. The Consumer Financial Protection Bureau (CFPB) says it is formally delaying the mandatory compliance date for the new rule from July 1, 2021 to October 1, 2022. The Bureau says it is taking the action "to help ensure access to responsible, affordable mortgage credit, and preserve flexibility for consumers affected by the COVID-19 pandemic and its economic effects."

The delay will also give lenders more time to use the so-called GSE Patch. The Patch provides QM status to loans that are eligible for sale to Fannie Mae or Freddy Mae (the GSEs). Use of the Patch, however, may be limited by recent revisions to the Preferred Stock Purchase Agreements between the U.S. Treasury and GSEs' regulator and conservator the Federal Housing Finance Agency.

The General QM final rule is intended to protect homeowners from debt traps and unaffordable, irresponsible mortgage lending. The rule grants QM status to loans that 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.

"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."