The Consumer Financial Protection Bureau (CFPB) has proposed delaying the Revised Qualified Mortgage (QM) Rule’s compliance date, but until that officially happens, Fannie and Freddie are sticking to the new (old) deadline.
Fannie Mae and Freddie Mac both issued lender letters this week providing notice that loans they purchase with application dates on and after July 1, 2021 must meet the new Revised QM Rule. As such, the two government-sponsored enterprises (GSEs) will no longer buy QM loans under the GSE patch that don’t meet the new guidelines.
July 1 is the current official compliance date established when final rules on changes to the QM definition were issued in December. Those changes include discarding the previous 43% debt-to-income (DTI) ratio threshold with a new approach based on the average prime offer rate (APOR) of comparable transactions. The new standards actually took effect on March 1, two months after they were published in the Federal Register, but the compliance date is a concrete deadline after which no QM loans may be originated under the old system.
Those dates appeared to enter a seeming state of flux after Dave Uejio, acting director of the CFPB, appeared to show trepidation about the new QM definition in February. This prompted some groups to push the bureau to delay or reconsider the rule, and the CFPB then proposed delaying the compliance date in March, pushing the deadline from July 1 to Oct. 1, 2022.
With no official rule doing so, however, both Fannie and Freddie have taken action to clear up any ambiguity with lenders about which date — until further notice, anyway — they are bound to observe.
“Recent amendments to our senior preferred stock purchase agreement (PSPA) with the U.S. Department of Treasury impose additional criteria on the loans we acquire,” Fannie’s lender letter said. “Under the terms of the amended PSPA, we are obligated to establish a program on or before Jul. 1, 2021 that ensures that loans we acquire meet [the criteria specified in the new QM definition].”
“With this bulletin, Freddie Mac is announcing that all loans subject to the Revised QM Rule and originated under the prior QM Rule in reliance on the GSE Patch are ineligible for sale to Freddie Mac, unless the loan meets the general QM definition under the Revised QM Rule [issued in December],” echoed Freddie Mac’s letter.