CFPB amends qualified mortgage rule, Part II: Tis the season for Seasoned QM!

by Janice Ringler, NAFCU Compliance Blog

I hope y’all had a very Mele Kalikimaka weekend! To round out the holiday season, this blog will discuss the Seasoned QM portion of the two final CFPB rules amending the ability to repay and qualified mortgage (ATR/QM) requirements. Our other blog, CFPB Amends Qualified Mortgage Rule, Part I: Shift from the Debt-to-Income Ratio, discusses the general QM final rule change which shifts the ATR determination from a DTI calculation to a price-based determination .

The bureau found that many loans are made to creditworthy members that do not fall within the existing QM loan definitions at consummation, so the bureau’s final rule created a new category of qualified mortgages, seasoned QMs, to “encourage safe and responsible innovation in the mortgage origination market.” If a loan meets the seasoned QM product restrictions, points-and-fees limits, underwriting requirements, and performance and portfolio requirements during the seasoning period, the loan is considered to meet the ATR standard.

Product Restrictions

For a transaction to be eligible to become a seasoned QM, the rule sets out specific product restrictions. These restrictions are:

 

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