I understand that the QM rules became effective on 2/27/21 with a 7/1/21 mandatory date (CFPB extended to 10/1/22-but really is irrelevant because of the GSEs)....

Can the Seasoned QM Rule now be applied to past loans in our portfolio or does it just apply to those loans originated on or after 2/27/21? I wasn't sure if we could do a review of our portfolio and now code some of those loans as QMs....

Actually...none of our current portfolio loans exceeded the pricing thresholds so could we consider those QMs?

Subject to the criteria for seasoned QMs, yes, you can include loans already on your books.

Wrong! See below.

Thanks, John!

John - are you sure?

1026.43 - Comment 2. General QM Amendments Effective on March 1, 2021. The Bureau’s revisions to Regulation Z contained in Qualified Mortgage Definition Under the Truth in Lending Act (Regulation Z): General QM Loan Definition published on December 28, 2020 (2021 General QM Amendments) apply with respect to transactions for which a creditor received an application on or after March 1, 2021 (effective date).

But we're not discussing general QMs. The question was about seasoned QMs.

Compliance 504 -- The effective date in your first post in this thread should be 3/1/2021. Both the General QM rule and the Seasoned QM rule were effective that day. The General QM rule originally had a 7/1/2021 mandatory compliance date but that was changed to 10/1/2022.

And although the Seasoned QM rule became effective on 3/1/2021, there's nothing in that rule that says it's conditioned on loan application or consummation after a stated date. So, it can be applied to loans already in portfolio on March 1, 2021, that meet all of the requirements for a Seasoned QM.

Note below in later posts that the change is applicable to loans for which applications were received on or after March 1, 2021.\, due to language in the prefatory text accompanying the rule at publication.

John,

Not to be a PITA, but when they are referencing "The Bureau’s revisions to Regulation Z contained in Qualified Mortgage Definition Under the Truth in Lending Act (Regulation Z): General QM Loan Definition published on December 28, 2020 (2021 General QM Amendments) " they are referencing all of the amendments and not just a General QM.

From the preamble: Consistent with many of the industry comments received, the Bureau does not believe that there is any reason to conclude that the inference to be drawn as to ability to repay is any different depending on whether a 36-month successful payment history begins before or after the effective date. However, the Bureau continues to believe that parties to loans existing at the time of the effective date may have significant reliance interests related to the QM status of those loans.[173] In light of these potential reliance interests, the Bureau has decided not to apply the final rule to loans in existence prior to the effective date. Thus, this final rule applies to covered transactions for which creditors receive an application on or after the effective date.

173.  As indicated in the proposal, the Bureau also recognizes that there could be legal issues related to the application of rules governing mortgage origination to loans existing prior to the effective date. See, e.g., Landgraf v. USI Film Prods., 511 U.S. 244, 269 (1994) (holding that a rule is impermissibly retroactive when it “takes away or impairs vested rights acquired under existing laws, or creates a new obligation, imposes a new duty, or attaches a new disability, in respect to transactions or considerations already past”) (citation omitted); Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208 (1988) (holding that an agency cannot “promulgate retroactive rules unless that power is conveyed by Congress in express terms”).

[quote][/quote]Sorry, but I don't agree (and it's rare that I don't agree with you, Randy). The General QM amendments (85 FR 86308) and the Seasoned QM amendments (85 FR 86402) were in separate final rules both published 12/29/2020, and both effective 3/1/2021. The General QM amendment and only the General QM amendment had a mandatory compliance date of 7/1/2021. It was that mandatory compliance date that was changed in the amendments published at 86 FR 12839 on 4/30.2021, and it's effective 6/30/2021, the day before the 7/1/2021 compliance date would have kicked in.

The seasoned QM doesn't take away any vested rights under existing laws or create a new obligation etc., it recognizes that a loan with a nearly spotless payment record for three years ought to be considered a QM.

Ok - I grant you I was looking at the wrong Federal Register, but the Seasoned QM amendments (85 FR 86402) also says this:

This final rule will take effect 60 days after publication in the Federal Register, which aligns with the effective date provided in the General QM Final Rule. For this final rule, the revised regulations apply to covered transactions for which creditors receive an application on or after the effective date.

And contains the exact same reasoning and footnote citation :

Consistent with many of the industry comments received, the Bureau does not believe that there is any reason to conclude that the inference to be drawn as to ability to repay is any different depending on whether a 36-month successful payment history begins before or after the effective date. However, the Bureau continues to believe that parties to loans existing at the time of the effective date may have significant reliance interests related to the QM status of those loans.[173] In light of these potential reliance interests, the Bureau has decided not to apply the final rule to loans in existence prior to the effective date. Thus, this final rule applies to covered transactions for which creditors receive an application on or after the effective date.

I have to side with Randy on this one.

BUREAU OF CONSUMER FINANCIAL
PROTECTION
12 CFR Part 1026
[Docket No. CFPB–2020–0028]
RIN 3170–AA98
Qualified Mortgage Definition Under
the Truth in Lending Act (Regulation
Z): Seasoned QM Loan Definition

From page 86403 bottom of the first column which is what Randy posted above.

This final rule will take effect 60 days
after publication in the Federal
Register, which aligns with the effective
date provided in the General QM Final
Rule. For this final rule, the revised
regulations apply to covered
transactions for which creditors receive
an application on or after the effective
date.

OK. I concede the point. It's unfortunate that there is no mention of effective date in the regulation itself or the commentary. But I admit I had not dug into the prefatory text. Thanks for sticking to your guns, Randy.