![]() ![]() It does not cover Truth in Lending Act and ATR exempt loans or loans that are exempt from these requirements in Regulation Z, such as investment properties and loans originated by Housing Finance Agencies. The new rule applies to consumer transactions that are secured by a dwelling and subject to the Ability to Repay (ATR) QM Rule. Additionally, there is no change to the current underwriting criteria for points and fees. ![]() Note that the thresholds are higher for small loans, manufactured housing and subordinate liens. Additionally, there is a rebuttable presumption that a borrower can repay the loan if the APR exceeds the APOR for a comparable loan by more than 1.5% but less than 2.25%. Under the new rule, there is a conclusive presumption that a borrower can repay the loan if the APR does not exceed the APOR for a comparable loan by 1.5% as of the date the interest rate is set. This new model takes into consideration annual percentage rate (APR), rate spread, and the average prime offer rate (APOR). The most significant impact of the new rule is the amendment of Regulation Z which replaces the definition of the ability to repay from a 43% maximum debt-to-income ratio with a price-based threshold. The CFPB chose to delay mandatory compliance due to the impact of COVID-19. Applications dated Octoor later must follow the new rule. For applications received prior to the new compliance date, lenders can choose to follow the original QM rule, the GSE Patch QM rule (if Fannie Mae and Freddie Mac do not exit conservatorship during this time period), or the new final QM rule. Although the new final rule took effect on June 30, 2021, the required compliance date of Jwas pushed back to October 1, 2022. In December of 2020, the Consumer Finance Protection Board (CFPB) issued a new General Qualified Mortgage (QM) final rule. This and other news regarding current regulatory updates can be found on the CFPB's website, blog was authored by my colleague Theresa Duggan, Director. The CFPB has set a deadline of Apto accept comments on the General QM Rule NPRM. The NPRM does not address the Seasoned Mortgage Rule, although we expect an NPRM from the CFPB revising or even revoking it in the near future. Please note that, on April 8, 2021, Fannie Mae and Freddie Mac announced that they have received guidance from FHFA, their conservator, that they may only purchase loans originated under the GSE Patch with application dates on or before June 30, 2021, and with either whole loan sale dates on or before Augor MBS pool The CFPB’s stated reason for the delay is to ensure the broadest possible access to credit for consumers, many of whom are struggling financially because of the effects of COVID-19. During this interim period, assuming that Fannie Mae and Freddie Mac do not leave FHFA conservatorship, both the current General QM definition (including the GSE Patch) and the new General QM definition would be available to lenders. On March 3, 2021, the CFPB issued a notice of proposed rulemaking (NPRM) to delay the mandatory compliance date for the revised General Qualified Mortgage Rule from applications received on or after Jto applications received on or after October 1, 2022. Both Rules were to take effect on March 1, 2021, and compliance with the General Qualified Mortgage Rule would have been mandatory for applications received on and after July 1, 2021. One adds an additional category to the General Qualified Mortgage (QM) Rule, while the other creates a new QM category for seasoned mortgages (the Seasoned Mortgage Rule). As we reported in January, the Consumer Financial Protection Bureau (CFPB) announced two final rules at the end of 2020 to complete its planned revisions to the TILA ability-to-repay (ATR) rule.
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