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CFPB | RIN: 3170-AA98 | Publication ID: Spring 2021 |
Title: Qualified Mortgage Definition Under the Truth in Lending Act (Regulation Z) | |
Abstract:
In July 2019, the Bureau issued an Advance Notice of Proposed Rulemaking (ANPRM) to solicit information about possible amendments to the qualified mortgage provisions of Regulation Z. With certain exceptions, Regulation Z requires creditors to make a reasonable, good faith determination of a consumer’s ability to repay any residential mortgage loan, and loans that meet Regulation Z’s requirements for "qualified mortgages” (QMs) obtain certain protections from liability. One category of QMs covers certain loans that are eligible for purchase or guarantee by either the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac). Under Regulation Z, this category of QMs (Temporary GSE QM loans or GSE Patch) was scheduled to expire no later than January 10, 2021. In June 2020, the Bureau released an NPRM to propose amendments to the definition of General QM to remove the 43 percent debt-to-income requirement and instead establish a pricing threshold (i.e., the difference between the loan’s annual percentage rate (APR) and the average prime offer rate for a comparable transaction) for loans to qualify as QMs. The Bureau also proposed in June to extend the GSE Patch for a short period until the effective date of the proposed alternative or until one or more GSEs exits conservatorship, whichever comes first, to allow the Bureau to complete this rulemaking and to avoid any gap between the expiration of the Patch and the effective date of the proposed alternative. Finally, in August 2020, the Bureau proposed adding a new "seasoning” definition of QM to create a pathway to QM safe-harbor status for certain mortgages when the borrower has consistently made timely payments for a period. In October, the Bureau issued a final rule extending the GSE Patch until the mandatory compliance date of the General QM final rule. In December 2020, the Bureau issued the General QM and Seasoned QM final rules largely as proposed, with certain adjustments to address concerns raised by commenters. The mandatory compliance date of the General QM final rule is July 1, 2021. However, in March 2021, the Bureau issued a proposed rule that would extend the mandatory compliance date of the General QM final rule until October 1, 2022, which would also have the effect of extending the GSE Patch and the previous, debt-to-income-based General QM definition until that date. The purpose of the proposed extension is to help ensure flexibility and access to responsible, affordable mortgage credit for consumers affected by the COVID-19 pandemic by continuing until that date the availability of all three QM definitions. |
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Agency: Consumer Financial Protection Bureau(CFPB) | Priority: Other Significant |
RIN Status: Previously published in the Unified Agenda | Agenda Stage of Rulemaking: Completed Actions |
Major: No | Unfunded Mandates: No |
CFR Citation: 12 CFR 1026 | |
Legal Authority: 12 U.S.C. 1639c(b)(3)(A),(B) |
Legal Deadline:
None |
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Timetable:
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Regulatory Flexibility Analysis Required: No | Government Levels Affected: None |
Small Entities Affected: Businesses | Federalism: No |
Included in the Regulatory Plan: No | |
RIN Data Printed in the FR: No | |
Agency Contact: Mark Morelli Office of Regulations Consumer Financial Protection Bureau Washington, DC 20552 Phone:202 435-7700 |