43(3)(i) (for loans over $100,000 adjusted for inflation, the limit is 3 percent of total loan amount). (3) “Total Points and Fees” do not exceed the QM limits set forth in. (iii) the loan does not have a balloon payment unless it meets the balloon payment QM requirements of. (ii) the loan does not allow for deferment of principal loan amount repayment (with limited exception for temporary payment accommodation in connection with a disaster or pandemic-related national emergency), and (1) The loan must be fixed rate, fully amortizing and provides for regular periodic and substantially equal monthly payments or, in the case of adjustable-rate or step-rate mortgages: Under the new definition, a General QM Loan meets all of the following criteria. It replaces the 43 percent Debt-To-Income (DTI) ratio limit with a price-based limit, and removes the Appendix Q national underwriting standards as well as any requirement to use Appendix Q for General QM loans. The General QM Final Rule redefines what a covered Qualified Mortgage transaction is. New Eligibility Requirements for General QM Loan Category Starting on the effective date and until July 1, 2021, compliance with the General QM Final Rule is optional. The CFPB is applying the mandatory compliance date to the date on which a creditor receives a consumer’s QM loan application. Both rules take effect sixty days from the date they are published in the Federal Register and have a mandatory compliance date of July 1, 2021. The CFPB issued final rules amending the General Qualified Mortgage loan definition in Regulation Z and, by separate rule, creating a new “Seasoned QM” loan category in Regulation Z. Residential mortgage loans that meet the criteria for QM status obtain certain protections from liability under Truth in Lending Act/Regulation Z labelled as “safe harbor” and “rebuttable presumption.” The Ability-to-Repay/Qualified Mortgage Rule administered by CFPB (“ATR/QM Rule”) requires a creditor to make a reasonable, good faith determination of a consumer’s ability to repay a residential mortgage loan according to its terms. In particular, because GSE Patch QM loans receive QM status based on the loans being eligible for sale to Fannie Mae or Freddie Mac, the GSE Patch QM rule would in effect no longer be available without further action to amend the PSPAs, or an amendment of the rule by the CFPB.Changes are coming in 2021 to the eligibility requirements for “Qualified Mortgage” or “QM” loans. If this position remains in place, even if the CFPB extends the mandatory compliance date of the new general QM rule beyond July 1, 2021, as a practical matter many lenders will no longer originate 43% DTI ratio general QM loans or GSE Patch QM loans for applications received on or after July 1, 2021. On April 8, 2021, Fannie Mae issued Lender Letter 2021-09 and Freddie Mac issued Bulletin 2021-13, to provide for the purchase of new general QM rule loans, and not the original 43% DTI ratio general QM rule loans or GSE Patch QM rule loans, for applications received on or after July 1, 2021. In view of the CFPB proposal to extend the mandatory compliance date for the new general QM loan to October 1, 2022, there was an issue regarding whether the PSPAs would be further amended to continue to provide for the purchase of original 43% DTI ratio QM loans and GSE Patch QM loans after July 1, 2021, if the CFPB finalized the proposed extension. Pursuant to the amendments, with regard to the original 43% DTI ratio QM loan, the new general QM loan based on an APR limit, and the GSE Patch QM loan, as of JFannie Mae and Freddie Mac could only purchase new general QM loans. In January 2021 the Preferred Stock Purchase Agreements (PSPAs) regarding Fannie Mae and Freddie Mac were amended. If the mandatory compliance date of the new general QM rule is extended to October 1, 2022, all three QMs loans could be originated for applications received before that date. Of the three types of QM loans, only the new general QM loan would be available for applications received on or after that date. Comments on the proposal were due by April 5, 2021.Ĭurrently, for applications received before July 1, 2021, lenders may originate loans using the original 43% debt-to-income (DTI) ratio QM loan, the new general QM loan based on an APR limit, and the temporary QM loan based on a loan being eligible for sale to Fannie Mae or Freddie Mac, which is commonly referred to as the “GSE Patch”. As previously reported, the CFPB proposed to delay the mandatory compliance date for the new general qualified mortgage (QM) rule that amends the Regulation Z ability to repay/QM rule from Jto October 1, 2022.
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