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#2252702 - 04/20/21 08:54 PM Re: QM rules under reconsideration rlcarey
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So, can you re-summarize what the [censored] is going on with the QM rules the CFPB has been spitting out lately? The GSE's seem to be on track to only accept QMs in which the DTIs do not exceed 43% is that correct?

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#2252703 - 04/20/21 08:59 PM Re: QM rules under reconsideration John Burnett
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Not sure what you mean. From a QM standpoint, there is no more 43% and Appendix Q.
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#2252705 - 04/20/21 09:10 PM Re: QM rules under reconsideration rlcarey
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I found my answer. Thanks.

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#2253084 - 04/27/21 09:02 PM Re: QM rules under reconsideration John Burnett
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From today's press release:

Today the Consumer Financial Protection Bureau (CFPB) formally delayed the mandatory compliance date of the General Qualified Mortgage (QM) final rule from July 1, 2021 to October 1, 2022. The CFPB 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.

[...]

Delaying the final rule's compliance date would also 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. The availability of the GSE Patch after July 1, 2021 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.

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#2253099 - 04/28/21 01:38 PM Re: QM rules under reconsideration John Burnett
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So what does this mean for Freddie & Fannie only accepting applications after 7/1/21 that follow the new rule?
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#2253100 - 04/28/21 01:42 PM Re: QM rules under reconsideration John Burnett
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Fannie & Freddie are affected by agreements created by other parties (not the bureau). So, nothing has changed.
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#2253120 - 04/28/21 03:47 PM Re: QM rules under reconsideration John Burnett
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Fannie and Freddie might be allowed to alter their plans, but they are under pressure to move on, so the odds on their changing are unknown. If they don't alter their plans, the GSE Patch may be allowed under the QM rules, but the GSEs won't be buying any GSE Patch loans, making the Bureau's amendment an empty gesture.
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#2253137 - 04/28/21 07:31 PM Re: QM rules under reconsideration John Burnett
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That is the way I pretty much read it also.
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#2253981 - 05/15/21 09:10 PM Re: QM rules under reconsideration John Burnett
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My head is spinning over the date changes and the conflicting information between what the CFPB says and what Freddie is saying. I'm interpreting it as even though the CFBP says the patch date is now Oct 2022, Freddie is saying they won't buy a loan that exceeds 43% so even though we may get an Accept with a DIR over 43%, if the app date is on or after July 1st they won't buy the loan when we try to sell it. Please correct me if I'm not interpreting this correctly.

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#2253983 - 05/16/21 02:16 PM Re: QM rules under reconsideration John Burnett
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That is not correct. The GSE's will require that applications comply with the new general QM rules under 1026.43(e)(2) rather than 1026.43(e)(4) starting with applications after July 1st, which is the current transition rules that CFPB extended.

The new general QM rules under 1026.43(e)(2) eliminates both Appendix Q and the 43% DTI requirement. It is replaced by a general ATR requirement and APOR/APR tests.

So, the extension by the CFPB of (e)(4) is sort of meaningless.
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#2253988 - 05/17/21 01:44 PM Re: QM rules under reconsideration John Burnett
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HERE is an interesting article on the QM mess.
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#2254368 - 05/25/21 04:50 PM Re: QM rules under reconsideration John Burnett
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Folks, how does this change anything, other than the 1st lien spread, essentially is a QM/HPML loan.

If a bank is a QM bank only with no HPMLs, how do these new rules help small banks with origination services only that sells its loans in the secondary market? Thanks.

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#2254370 - 05/25/21 05:01 PM Re: QM rules under reconsideration John Burnett
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I do not understand your question? Selling into the secondary market and being a small bank doing portfolio loans is really two different things.
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#2254380 - 05/25/21 06:18 PM Re: QM rules under reconsideration rlcarey
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Let's try this, the new definition of the Gen'l QM seems to mix sections of Reg. Z and somehow you get a type of QM that may also be a
HPML or HPCT and places the burden on the creditor to determine the ATR by cutting out pieces of the ATR rules you must follow. Later you
get a safe harbor for compliance with specified external standards such as following the Selling Guides of the GSE per chapters described.

After all this posturing, the big take away is that the loan pricing is the only real thing that changes. The whole QM rule need a "reset" as the bureau seems to continue to try to put the square peg in a round hole!

Sorry for the rambling, but its simply frustrating to continue to try and unravel this mess of Reg. Z the bureau has managed to twist into knots.

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#2254381 - 05/25/21 06:39 PM Re: QM rules under reconsideration John Burnett
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As of July 1st for secondary market loans, you need to comply with the new General QM, which you are correct that it has specific APR/APOR thresholds and eliminates specific compliance with Appendix Q.

Even though the Temporary QM for loans eligible for purchase by the GSEs has been extended, the GSE's are requiring that you comply with the new General QM rules for all applications received July 1st or later. So regardless of what CFPB did with the Temporary QM, the GSE's essentially killed any extension.

The Temporary QM was always going to go away. That was a foregone conclusion from the get go - hence its name.
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#2254386 - 05/25/21 07:02 PM Re: QM rules under reconsideration rlcarey
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Thank you, rl. I've been working on this today trying to prepare the mortgage dept. origination for the coming change. Investors are working on
changing all their software in preparation for the new Gen'l QM. Thanks again.

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#2255124 - 06/10/21 03:23 PM Re: QM rules under reconsideration John Burnett
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Late to the game here but want to make sure I have this right....

Sold Loans must meet the new General QM rule based on APR to APOR spread (this will be calculated by software and proof kept in the loan file....this spread is not reported anywhere under any regulation)

Retained Loans do not have to meet the General QM rule (we do not have to change any of our practices for non-QM loans)....these loans can now become Seasoned QMs based on those rules...

All loans still must meet ATR requirements (there is no 43% DTI or Appendix Q)

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#2255126 - 06/10/21 03:37 PM Re: QM rules under reconsideration John Burnett
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If you are a HMDA reporter, I believe you report the spread (difference between a covered loan's APR and the APOR for a comparable transaction for covered loans and for applications that are approved but not accepted that are covered by Reg Z, except for assumptions, purchased loans and reverse mortgages. (1003.4(a)(12))
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#2255131 - 06/10/21 03:58 PM Re: QM rules under reconsideration John Burnett
Compliance504 Offline
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Thank you for clarifying that John.... I wasn't sure if those figures were one in the same....

We are HMDA....so we've been doing this all along....lol....I feel so lost sometimes...

So really we don't need to do anything different and now can have our retained loans become seasoned QMs....

Am I oversimplifying this??



















I

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#2255136 - 06/10/21 04:29 PM Re: QM rules under reconsideration John Burnett
Compliance504 Offline
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I am confused because I thought the calculations were different for the HMDA rate spread and the QM spread...

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#2255148 - 06/10/21 05:59 PM Re: QM rules under reconsideration John Burnett
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The commentary on the definition of the APOR in Reg Z comment 35(a)(2)-3 says the APOR has the same meaning in 1026.35 as in Regulation C section 1003.4(a)(12)(ii). So I don't see where there's a difference.
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#2255150 - 06/10/21 06:18 PM Re: QM rules under reconsideration John Burnett
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Well, the APOR is the same. The APR may not be the APR on the final CD like for the HMDA rate spread calculation however. If you have an adjustable rate loan that adjusts in five years or less (i.e., a 3/1 or 5/1 ARM), then the APR is based on the maximum interest rate that can apply in the first five years as if it was applied for the life of the loan..
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#2255155 - 06/10/21 07:02 PM Re: QM rules under reconsideration John Burnett
John Burnett Offline
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Thanks, Randy, for that explanation. I understand Compliance504's question now.
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#2255157 - 06/10/21 07:17 PM Re: QM rules under reconsideration John Burnett
Compliance504 Offline
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Yes, Randy....I was looking at Encompass updates and noted that the APR is calculated differently for ARMs....it's called it a DTI-APR....

Also, in the Encompass information it shows a QM APR and a regular APR.....so I assumed that there was a different calculation...

So for HMDA we will use the APR from the CD.....but for determining QM status we will use the Encompass calculation...

Does this really only affect ARM loans?

If I review the HMDA LAR spreads I should be able to identify any that aren't QMs....unless they are ARMs....then I'd have to look for the Encompass QM information....

Also...our consumer loans are non-QM because we set a higher DTI for them...but they will now be QMs if they meet the pricing threshold....correct?

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#2255158 - 06/10/21 07:27 PM Re: QM rules under reconsideration John Burnett
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Yes - the different is only on ARMs that adjust in five years or less.

And under the new General QM category, there is only the rate spread threshold and no specific DTI threshold and no Appendix Q. The DTI just has to be reasonable.
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