The Consumer Financial Protection Bureau (CFPB) recently announced two new rules to address the impending expiration of the Government-Sponsored Enterprises Patch (GSE Patch), which is scheduled to expire in January 2021 or when the GSEs (Fannie Mae and Freddie Mac) exit conservatorship, whichever comes first.
In the first rule, the CFPB proposes extending the GSE Patch, and the second would remove the debt-to-income (DTI) requirement from qualified mortgages.
To read the proposed rule on the General QM loan definition, click here.
To read the proposed rule on the extension of the QM Patch, click here.
“The GSE Patch’s expiration will facilitate a more transparent, level playing field that ultimately benefits consumers through promoting more vigorous competition in mortgage markets. The Bureau is proposing to replace the Patch with a price-based approach to QM loans to preserve consumer access to mortgage loans while also making sure consumers have the ability to repay them. The Bureau is committed to ensuring a smooth and orderly mortgage market throughout its consideration of these issues and any resulting transition away from the GSE Patch,” said CFPB Director Kathleen L. Kraninger.
The CFPB says it is taking steps to ensure a smooth and orderly transition away from the Temporary GSE QM loan definition and to maintain access to responsible, affordable mortgage credit upon its expiration.
“America’s REALTORS® applaud the CFPB’s action to provide a temporary QM patch extension, and commend the Bureau and Director Kraninger for acting on behalf of our nation’s consumers and homebuyers at a time when market stability is so critical,” said NAR President Vince Malta, broker at Malta & Co., Inc., in San Francisco, Calif. “Perhaps most importantly, we appreciate the Bureau’s decision to eliminate a hard DTI standard, and we look forward to more closely examining the proposed replacements and their impact on homebuyers over the coming months.”
“MBA appreciates the CFPB’s proposed changes to the QM Rule and extension of the GSE Patch. As proposed, the regulatory changes would seek to ensure creditworthy borrowers have access to sustainable mortgage credit without disruption to the overall mortgage market,” said Bob Broeksmit, president and CEO of the Mortgage Bankers Association (MBA). “MBA looks forward to reviewing and commenting on both rules, and we will continue to work with policymakers and all other stakeholders to ensure borrowers are both protected and have access to credit throughout the mortgage lending process.”
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