"The new rule does not replace any of the safe product features, which are embedded in the law," said Meg Burns, executive vice president of the Housing Policy Council. In addition, QM loans still forbid the kind of features that gave rise to ability-to-repay issues during the Great Recession’s housing crash, such as no-documentation underwriting, negative amortization or interest only structures. Safe Harbor status offers the most assurance that a loan meets ability-to-repay requirements. Several consumer protections in the ability-to-repay rule still apply under both the new and old QM definitions, both of which remain available for voluntary use.įor example, there’s still a requirement that the annual percentage rate can’t exceed 150 basis points over the annual prime offer rate for QM Safe Harbor status. “So many consumers have been hit hard by the pandemic and the economic downturn, and we want to ensure that responsible, affordable mortgages remain available,” Dave Uejio, the CFPB's acting director, said in a press release. The small market for short reset adjustable-rate mortgages with a fixed rate period that lasts for five years or less, for example, will not meet the new QM definition. The new QM rule retains a lot of flexibility for the GSEs, but there are some rare exceptions. The 15-month delay in mandating use of the new QM rule could make mortgage companies more comfortable selling loans in the QM category to either the GSEs or the private market for a longer period of time.
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