Receive our daily newsletter

CFPB Proposes New Category of Qualified Mortgages

The CFPB proposed amendments to Regulation Z ("Truth in Lending Act") that would establish a new category of "qualified mortgages" ("QMs"); i.e., mortgages as to which a creditor may receive liability protection.

The new QM category, "Seasoned QMs," would be defined as transactions in which the loan (i) is secured by a first lien, (ii) has a fixed rate with payments that are fully amortizing and non-balloon, and (iii) has a term that does not exceed 30 years. Additionally, the transactions must satisfy points-and-fees limits and underwriting requirements over a "36-month seasoning period." Seasoned QMs would be limited to covered transactions that have no more than two 30-day delinquencies and no 60-day delinquencies, not including nonpayments resulting from a temporary payment accommodation.

The rule proposal follows two other recent proposals regarding QMs: one to amend the definition of "General QM" in Regulation Z and the other to extend the expiration date of the "Government-Sponsored Enterprise Patch," a temporary QM definition (see here and here, respectively).

Comments on the proposal must be submitted within 30 days of its publication in the Federal Register.

Related Articles

Premium Content

Available only to Cabinet Premium subscribers.

 

Tags

Activities: 
Regulated Entities: 
Sub-Product: 
Qualified Mortgage
Body of Law: 
Jurisdiction: 
Organization: