Just as bankers are planning how to proceed with the current General and Seasoned QM rules, the CFPB announces it's thinking about reconsidering one or both of those rules.

CFPB reconsidering QM rules

Here is my summary - please let me know if you have any comments.

The mandatory compliance date for the Revised General QM may be delayed but remains effective March 1. That means that there may be a longer period of time (i.e., March 1, 2021 to some future date) when a lender can either use the existing rules or the new rules.

The new Seasoned QM may be revoked or amended prior to March 1 or there after.

What I have failed to see much discussion on is the new quasi Agency QM requirements that will impact FHA, VA and USDA loans also beginning March 1.

That's how I understand it, Randy.

What concerns me is whether or not we will need to start expecting 11th (or ever 13th) hour changes every time there is an administration change in the CFPB?

It's not too often that the political pendulum swings quite so far as it did in 2017 and 2021. But yes, when there's a change in party, we do seem to get some last minute pushes by the outgoing folks and early attempts to walk them back by the incoming ones. The QM rule "re-think" is going to be a mess. March 1 is so close (and July 1 isn't far away).

And the CFPB isn't helping. I just receive it's email that says:

"In 2020, the CFPB issued new rules to help ensure borrowers can afford the mortgages they take on. To ensure consumers have the options they need, the CFPB will extend the mandatory compliance deadline for the Qualified Mortgage rules until July 1, 2021."

Am I reading this right? They don't mean until July 1, 2021? It will be extended to sometime beyond that date?

That comment is based on the final rule that was previously released and has nothing to do with this reconsideration. That was the mandatory compliance date of the new rules and when the old rules went away. Under that final rule, you could operate under the old rules or the new rules between March 1 and July 1.

The recipe for QMs is getting like chop suey.

What I don't understand is why the CFPB sent that email today - 2/24/21.

Well the answer to that is easy - the right and the left hand have a communications problem.

Thank you. That makes me feel much better!

The only thing clear about this is that lenders should consider a "wait and see" posture on the General and Seasoned QM rules.

From CFPB press release today (edited to just include the most relevant information for planning ahead).

The Consumer Financial Protection Bureau (CFPB) today released a notice of proposed rulemaking (NPRM) to delay the mandatory compliance date of the General Qualified Mortgage (QM) final rule from July 1, 2021 to October 1, 2022. The CFPB is proposing to extend the compliance date to ensure homeowners struggling with the financial impacts of the COVID-19 pandemic have the options they need.

If this NPRM is finalized as proposed, the old, DTI-based General QM definition; the new, price-based General QM definition; and the GSE Patch (unless the GSEs exit conservatorship prior to October 1, 2022) would all remain available as long as the lender received the consumer's application prior to October 1, 2022.

Comments on the NPRM must be received on or before April 5, 2021.

I guess what doesn't sit right with me is that this delay is described as being best for consumers who could lose their homes:

"The CFPB is proposing to extend the compliance date to ensure homeowners struggling with the financial impacts of the COVID-19 pandemic have the options they need.

“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 Bureau Acting Director David Uejio. “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.”"

So this is or is not a good rule or it's only bad right now? Or, is this a chance to change the QM rule to what the new director wants?

The CFPB is just putting a consumer spin on it. All this really does is give a longer transition period to the lenders - which is never really that bad of a plan in my book.

So where are we with the Seasoned QM rule? There was no change, correct? So does this mean that if we make a non-QM under either the old or the new General QM defintion, we can start the clock on the 36 month seasoning period? Do we get to pick and choose which General QM rule we want to follow loan by loan?

Yes and Yes

If they are asking for comments by the April date, when would we expect to know if the extension will be put into place? Just trying to gauge my approach.

It is a foregone conclusion in my mind. It just extends the overlap period.

How does this all play out with the latest from the GSE's and the agreement with the Treasury Dept to only purchase loans underwritten following the new General QM rule as of June 30th when the compliance date may be pushed out until 2022? This is confusing me......

Good questions. The GSEs are feeling their way around here, and have said they will be coming out with more information. And the Bureau is getting a lot of flak about its proposal to delay the QM rules. So we really don't know what will happen.

he latest from the GSE's and the agreement with the Treasury Dept to only purchase loans underwritten following the new General QM rule as of June 30th

Can someone please elaborate on this? I must have missed the announcement/article.

https://www.bankersonline.com/topstory/167575

I also included it in our Compliance Briefing this morning, Dan. The Top Story article has links out to the Fannie/Freddie advisories.

Thank you John. I did miss the 4/8/2021 Freddie bulletin.

The GSE's in essence just gutted the proposed delay by the CFPB it appears.

Exactly!