CFPB Details New “Seasoned QM” Mortgage Proposal

The Consumer Financial Protection Bureau (CFPB) has proposed the implementation of a new type of seasoned qualified mortgages (Seasoned QMs). 

The purpose, the CFPB said, is to “encourage innovation and help ensure access to responsible, affordable [mortgage credit]."

For a loan to be eligible to become a Seasoned QM, among other restrictions, the creditor would be compelled to consider and verify the consumer’s debt-to-income ratio (DTI) or residual income at origination. 

Seasoned QMs would only be available for covered transactions that have no more than two 30-day delinquencies and no delinquencies of 60 or more days at the end of the seasoning period.

Also, should there be a disaster or pandemic-related national emergency, as long as certain conditions are met, the proposal would not disqualify a loan from becoming a Seasoned QM for the failure to make full contractual payments if the consumer receives a temporary payment accommodation. 

“Today’s proposal continues the Bureau’s work to encourage safe and responsible innovation in the mortgage origination market,” said Consumer Financial Protection Bureau 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.” 

The proposal points to two previous new rules from June 2020 regarding QMs. 

Before issuing a final rule, the CFPB generally announces and explains its proposals to address an issue and invites public comment.

The announcement in its entirety can be read at the CFPB website.