On April 27, 2021, the CFPB formally announced the delay of the mandatory compliance date of the General Qualified Mortgage (QM) Final Rule from July 1, 2021 to Oct. 1, 2022. The General QM Final Rule removes the requirement that a consumer’s debt-to-income (DTI) ratio cannot exceed 43% and creates a “price-based limit.” Until the mandatory compliance effective date, the CFPB is allowing creditors to follow either the General QM loan definition in effect before March 1, 2021 or the revised Final Rule. The temporary GSE QM loan definition, or “GSE Patch,” which allows loans for sale to Fannie Mae or Freddie Mac (the "GSEs") with a DTI exceeding 43% is also available to creditors until the mandatory compliance date or until the GSEs exit federal conservatorship.
In January 2021, the GSEs entered into an agreement with the Department of Treasury that made changes to the Amended and Restated Preferred Stock Purchase Agreement (the “PSPA”). Under the PSPA, the GSEs will no longer be able to purchase loans that do not meet the CFPB’s revised General QM loan definition set forth in 12 CFR 1026.43(e)(2).
On April 8, 2021, Fannie Mae issued Lender Letter 2021-09 and Freddie Mac issued Bulletin 2021-13 to announce that under the PSPA, loans originated under the prior General QM definition (Appendix Q) will no longer be eligible for purchase. Loans originated under the GSE Patch will only be eligible for purchase if the requirements of the revised General QM loan definition are also met. The changes are effective for loans with an application date of July 1, 2021 or later, and for all loans with settlement dates after Aug. 31, 2021. Therefore, even if the CFPB extends the mandatory compliance date for the General QM Final Rule beyond July 1, 2021, most lenders will need to originate loans that meet the new definition. The GSEs will be releasing additional notices announcing guideline and policy changes.
The amendments exclude government loans that otherwise meet QM requirements, including Section 184 Native American Mortgages and Section 502 GRH Mortgages, which will continue to be eligible for purchase under an FHFA exception.
DocMagic has released a new QM audit that compares the Annual Percentage Rate (APR) to the applicable Average Prime Offer Rate (APOR) and determines if the APR exceeds the price-based limitation threshold. The audit will run concurrently with the previous QM audits until Sept. 1, 2021.
Effective Sept. 1, 2021, DocMagic will be removing options related to the previous General QM definition, including QM audits for DTI and the field for QM DTI Ratio. Additionally, DocMagic will be removing the Temporary Agency/GSE option for QM Type and the GSE Type. Any data received for using the Temporary Agency/GSE options will be routed to the General QM Type.
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