- #WHEN DOES MANDATORY COMPLIANCE OF THE NEW QM RULE BEGIN PATCH#
- #WHEN DOES MANDATORY COMPLIANCE OF THE NEW QM RULE BEGIN MAC#
On April 8, 2021, Freddie Mac and Fannie Mae announced that, due to restrictions in their amended Preferred Stock Purchase Agreements with the Treasury Department, they will not buy mortgages with an application date after Jwhich apply the GSE Patch.
#WHEN DOES MANDATORY COMPLIANCE OF THE NEW QM RULE BEGIN PATCH#
The GSE Patch (unless the GSEs exit conservatorship prior to October 1, 2022). 
The old, DTI-based General QM definition or.
The new, price-based General QM definition. In the meantime, for loans where the lender receives the consumer’s application before October 1, 2021, the general QM definition requirements can be met by applying any of the following: The CFPB has previously announced that it will review the General QM Rule to determine if it should be modified or revoked, leaving uncertainty for lenders as to whether the new General QM definition will be permanent. As discussed in Buchalter’s DecemClient Alert, Coming in 2021: CFPB Finalizes Changes to “Qualified Mortgage” Definition and Creates a New “Seasoned QM” Loan Category, the General QM Rule changed the general definition for a QM (General QM definition), replacing the 43 percent DTI limit with a price-based limit and removing the application of Appendix Q. In December, 2020, the CFPB published the final General QM Rule. WBK covered Fannie Mae’s and Freddie Mac’s guidance on the changes to loan eligibility due to the Revised General QM Rule and the Amended PSPA here and here.On April 27, the CFPB published a final rule extending the date for mandatory compliance with the new “general” Qualified Mortgage (QM) rule (General QM Rule) until October 1, 2022. However, the preamble to the final rule also notes that the CFPB “recognizes that the practical availability of the Temporary GSE QM loan definition may be affected by policies or agreements created by parties other than the Bureau, such as the Preferred Stock Purchase Agreements (PSPAs), which include restrictions on GSE purchases that rely on the Temporary GSE QM loan definition after July 1, 2021.” The GSEs have announced that pursuant to their PSPAs, to be eligible for purchase, loans with application dates on or after July 1, 2021, must qualify as Revised General QM Loans. Notably, the final rule also provides lenders the option of originating a QM loan meeting the requirements of the Temporary GSE (Patch) QM until the new mandatory compliance date, or until the GSEs exit conservatorship, if prior to such date. The Revised General QM Rule went into effect on March 1, 2021. In publishing the final rule, the CFPB states that “he Bureau is taking this action to help ensure access to responsible, affordable mortgage credit and to preserve flexibility for consumers affected by the COVID-19 pandemic and its economic effects.” Although the final rule extends the Revised General QM Rule’s mandatory compliance date from July 1, 2021, to October 1, 2022, it does not change the Rule’s effective date. Note the final rule essentially adopts the CFPB’s proposed rule on this subject (see WBK’s coverage of the proposed rule here) with only minor, non-substantive changes. The final rule is effective on June 30, 2021. The lender may, if it chooses, comply with either the original General QM loan definition (requiring, among other factors, that a QM have a debt-to-income ratio not exceeding 43%, consistent with Appendix Q), or the Revised General QM loan definition (requiring, among other factors, a QM meet specified pricing thresholds). Accordingly, for covered transactions where a lender receives an application for a loan between March 1, 2021, and Octoand seeks to originate a QM loan, the lender will have two options. On April 27, 2021, the CFPB published a final rule extending the mandatory compliance date for its December 2020 final rule revising the General Qualified Mortgage (QM) requirements (Revised General QM Rule).
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