CFPB Sends Letter Expressing Intention to Propose New ATR/QM Rules

On January 17, 2020, CFPB Director Kraninger provided an update to Congress on the CFPB’s views regarding its efforts to end the GSE Patch and modify existing Qualified Mortgage (QM) regulations, in a reply to a letter regarding the Bureau’s advance notice of proposed rulemaking (ANPR) on these subjects.

The reply indicates that the CFPB has decided to propose an amendment to the rules which would “move away” from debt-to-income ratio “and instead include an alternative, such as a pricing threshold (i.e., the difference between the loan’s annual percentage rate and the average prime offer rate for a comparable transaction.)”

The reply also indicates the CFPB expects to propose to temporarily extend the expiration of the GSE Patch until the effective date of a new proposal or until one or more of the GSEs exits conservatorship, whichever comes first.  The Bureau is working diligently to issue a proposed rule no later than May 2020 that will seek comment on these amendments. 

Additionally, the letter says in order to supplement the new proposed definition of QM, the CFPB also is considering offering a new “seasoning approach” for certain mortgages. This could provide an “alternative pathway to QM safe-harbor status” when the borrower has consistently made timely payments.

WBK’s earlier article on the CFPB’s ANPR, as well as additional background information on the ATR/QM Rule, can be found here.