The CFPB finalized its qualified-mortgage revisions to replace the 43% debt-to-income ratio with a pricing threshold. Meanwhile, the agency also finalized its “seasoned” QM rule allowing certain non-agency loans to become QMs if they meet performance requirements.
Much of the conversation over the past few weeks following the election of Joe Biden to the White House has focused on the bureau’s mortgage-related actions.
The new expiration date will be tied to the mandatory compliance date for the revised general QM rule, or when the GSEs exit conservatorships, whichever comes first.
While lenders have recommended that a wider population of loans be eligible under the new QM category, consumer advocacy groups urged the CFPB to withdraw the proposal.
Significant structural changes at the CFPB under the Trump administration; CSBS allows consumer gripes on its examination platform; Ed Pinto complains about the QM patch.
Many participants have suggested the CFPB increase the safe harbor qualified-mortgage threshold to ensure borrowers are not arbitrarily left with only FHA-insured options.
The proposed seasoned QM category is designed to encourage non-QM lending with additional legal certainty. But the eligibility requirements will make banks, thrifts and credit unions the main beneficiaries, or so it appears.
Mortgage industry groups want a transition period between the expiration of the GSE “patch” and the implementation of a revised general QM definition to minimize market disruption.
The idea behind the proposed pricing approach is to prevent market disruption and extend mortgage credit to consumers who are currently excluded due to strict underwriting requirements.
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