CFPB proposes delay to QM definition’s mandatory compliance date

Due to the negative impacts of the COVID-19 pandemic, the Consumer Financial Protection Bureau (CFPB) has proposed to delay the mandatory compliance date of the new general qualified mortgage (QM) final rule.

The new rule would cast aside the previous 43% debt-to-income (DTI) ratio threshold to determine QM eligibility and replace it with a new approach based on the average prime offer rate (APOR) of comparable transactions. Much of the lending industry has expressed approval for the new standard, although some, like the Community Home Lenders Association (CHLA), have asked the CFPB to delay the rule or reconsider it altogether.

With COVID continuing to throw many Americans’ financial situations into disarray, it looks like the CFPB is definitely open to a postponement. The CFPB’s proposal, outlined in a notice of proposed rulemaking issued March 3, moves the mandatory compliance date from July 1, 2021, to Oct. 1, 2022. If it is finalized as proposed, both the old, DTI-based QM definition and the new, APOR-based definition would be available for use, as long as the lender receives the borrower’s application prior to the Oct. 1 deadline.

Extending the compliance date would also allow lenders more time to use the government-sponsored enterprise (GSE) patch, which provides QM status to loans eligible for sale to Fannie Mae and Freddie Mac. The patch would remain in effect unless the GSEs exit conservatorship before Oct. 1, 2022.

“At a time when so many consumers are struggling and at risk of losing ground, particularly Black and Hispanic consumers, we need to do all we can to help people stay in their homes and to ensure the availability of responsible, affordable mortgages,” said Dave Uejio, acting director of the CFPB. “In proposing to extend the date by which lenders must comply with the CFPB’s new General QM definition, we are working to provide needed options for both homeowners and lenders during a time of uncertainty and hardship.”


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