CFPB Formally Delays QM Final Rule Compliance Date to Oct. 2022

The Consumer Financial Protection Bureau yesterday formally delayed the mandatory compliance date of its General Qualified Mortgage final rule to October 1, 2022.

The rule had been set to go into effect this July 1.

CFPB Acting Director Dave Uejio said the Bureau is taking this 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.”

“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,” Uejio said. “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.”

The Mortgage Bankers Association, in an Apr. 5 letter to the CFPB, had urged the Bureau not to delay the effective date of its new General Qualified Mortgage Rule, saying the Bureau’s rationale for delaying the rule would not accomplish its stated goals nor benefit consumers.

In MBA’s letter, MBA President and CEO Robert Broeksmit, CMB, said the delay was unnecessary. “While we commend the Bureau for its willingness to take proactive steps to mitigate the effects of the COVID-19 pandemic on the housing finance system, we do not support the proposal to delay the General QM Final Rule’s mandatory compliance date, as it will not expand access to credit and will inject considerable uncertainty into the housing market,” he said.

The General QM final rule is part of the CFPB’s work to protect homeowners from “debt traps and unaffordable, irresponsible mortgage lending.” Under the statute, QM loans are presumed to be made based on the lender’s reasonable determination of the homeowner’s ability to repay the loan.

The Bureau said 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 ratio, and not solely based on certain pricing thresholds.

The CFPB also said delaying the final rule’s compliance date would give lenders more time to use the Government-Sponsored Enterprise (GSE) Patch, which provides QM status to loans that are eligible for sale to Fannie Mae or Freddie Mac. However, availability of the GSE Patch after July 1 may be limited by recent revisions to the Preferred Stock Purchase Agreements entered into by the Department of the Treasury and the Federal Housing Finance Agency.

MBA noted as a result of the final rule, creditors who receive an application on or after March 1, 2021, but prior to October 1, 2022, will have the option of complying with either the original, DTI-based General QM loan definition, the revised, price-based General QM loan definition or the Temporary GSE QM loan definition.

However, Pete Mills, MBA Senior Vice President of Residential Policy and Member Engagement, said the GSE Patch never applied to loans that weren’t being sold to Fannie Mae or Freddie Mac. Mills recommended MBA members continue their efforts to implement the QM rule on or before July 1 as originally planned.

A copy of the Final Rule can be accessed here. An executive summary can be found here.