CFPB Announcement to Impact QM Deadline

The Consumer Financial Protection Bureau (CFPB) has announced a three-day extension on the comment period on its notice of proposed rulemaking (NPRM) to create a new category of seasoned qualified mortgages (Seasoned QMs).

The original deadline of September 28 was moved to October 1 in order to accommodate for Yom Kippur, the holiest day of the Jewish faith. This year’s Yom Kippur falls on September 28.

The NPRM seeks industry input on a new Seasoned QM category. According to the CFPB, loans that would be considered a Seasoned QM would cover first-lien, fixed-rate covered transactions that met certain performance requirements over a 36-month seasoning period. These covered transactions would need to be held on the creditor’s portfolio during the seasoning period, and would also meet the compliance needs with general restrictions on product features and points and fees and meet certain underwriting requirements.

The CFPB added that eligible Seasoned QM loans would also require that the creditor consider and verify the consumer’s debt-to-income ratio or residual income at origination. The CFPB proposal also mandated that Seasoned QMs would only be available for covered transactions with no more than two 30-day delinquencies and no delinquencies of 60 or more days at the end of the seasoning period. And with an eye on current events, the proposal notes that pandemic-related emergencies or natural disasters would not disqualify a loan from becoming a Seasoned QM if the borrower is granted a temporary payment accommodation.

“Today’s proposal continues the Bureau’s work to encourage safe and responsible innovation in the mortgage origination market,” said CFPB Director Kathleen L. Kraninger. “Our goal through our very deliberative rulemaking process is to protect, promote and preserve the financial well-being of American consumers while at the same time offering access to responsible, affordable mortgage credit.”