By Kerry Smith
The Qualified Mortgage (QM) final rule, which would generally make it more difficult for some buyers to get a home loan, was pushed back from its July 1, 2021, date.
WASHINGTON – The Consumer Financial Protection Bureau (CFPB) formally postponed its mandatory compliance date for the General Qualified Mortgage (QM) final rule from July 1, 2021, to October 1, 2022.
The CFPB says it postponed the date “to help ensure access to responsible, affordable mortgage credit, and preserve flexibility for consumers affected by the COVID-19 pandemic.”
The QM's goals is to ensure that buyers can afford the mortgage they take out and have the ability to repay it. But at the same time, a new QM update could block some buyers from the home buying process if they no longer qualify under the new lending rules.
“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,” says CFPB Acting Director Dave Uejio. “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.”
By following QM rules, banks can sell a home loan in the secondary market, generally Fannie Mae and Freddie Mac. They can then make additional loans to other buyers. As a result, they prefer to make QM loans if they don’t plan to hold onto the loan after closing.
Under the statutes, Fannie and Freddie presume that QM loans were based on the lender’s reasonable determination of the homeowner’s ability to repay it. This delay in the mandatory compliance date of the QM final rule gives lenders more time to offer QM loans based on a homeowners’ debt-to-income (DTI) ratio, and not solely based on certain pricing thresholds.
However, the change announced by the CFPB isn’t the only thing that might affect lending criteria. After July 1, it could also be impacted by recent revisions to the Preferred Stock Purchase Agreements entered into by the Department of the Treasury and the Federal Housing Finance Agency.
