As we reported in January, the Consumer Financial Protection Bureau (CFPB) announced two final rules at the end of 2020 to complete its planned revisions to the TILA ability-to-repay (ATR) rule. One adds an additional category to the General Qualified Mortgage (QM) Rule, while the other creates a new QM category for seasoned mortgages (the Seasoned Mortgage Rule). Both Rules were to take effect on March 1, 2021, and compliance with the General Qualified Mortgage Rule would have been mandatory for applications received on and after July 1, 2021.
On March 3, 2021, the CFPB issued a notice of proposed rulemaking (NPRM) to delay the mandatory compliance date for the revised General Qualified Mortgage Rule from applications received on or after July 1, 2021 to applications received on or after October 1, 2022. During this interim period, assuming that Fannie Mae and Freddie Mac do not leave FHFA conservatorship, both the current General QM definition (including the GSE Patch) and the new General QM definition would be available to lenders. The CFPB’s stated reason for the delay is to ensure the broadest possible access to credit for consumers, many of whom are struggling financially because of the effects of COVID-19.
Please note that, on April 8, 2021, Fannie Mae and Freddie Mac announced that they have received guidance from FHFA, their conservator, that they may only purchase loans originated under the GSE Patch with application dates on or before June 30, 2021, and with either whole loan sale dates on or before August 31, 2021 or MBS pool
issue dates on or before August 1, 2021.
The NPRM does not address the Seasoned Mortgage Rule, although we expect an NPRM from the CFPB revising or even revoking it in the near future. The CFPB has set a deadline of April 5, 2021 to accept comments on the General QM Rule NPRM.
This and other news regarding current regulatory updates can be found on the CFPB's website, cfpb.gov.
In this blog concerning legal and regulatory matters of interest to the mortgage industry, Sandler Law Group (SLG) provides general information and industry observations that are not motivated by or concerned with a particular past occurrence or event, or a specific existing legal problem of which SLG is aware. Nothing published herein is intended to constitute legal advice and the use of the newsletter by a reader shall not give rise to an attorney-client relationship with SLG. SLG expressly disclaims any representation of accuracy or reliability as to the content of this newsletter, as well as any obligation to maintain such content over time or to ensure it is free from errors. Brad Cope is the attorney responsible for the SLG content of this newsletter. The attorneys of SLG are not certified by the Texas Board of Legal Specialization.
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