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CFPB Extends QM Patch

Navi Persaud
Oct 20, 2020
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The Consumer Financial Protection Bureau issued a final rule that extends the Government-Sponsored Enterprise Patch until the mandatory compliance date of a final rule amending the General Qualified Mortgage, according to a press release. The move comes months before the originally scheduled expiration date of January 10, 2021. The CFPB adds that the GSE Patch will expire if Fannie Mae and Freddie Mac exit conservatorship.

The CFPB states that it is releasing the final rule to "ensure a smooth and orderly transition away from the GSE Patch and to maintain access to responsible, affordable mortgage credit upon its expiration." The ruling has also been put into place to help those who may be affected if the GSE Patch expires before the mandatory compliance date.

The CFPB's initial proposal to amend the General QM loan definition was issued on June 22, 2020, the same day it issued a proposal to extend the GSE Patch. The CFPB is developing a final rule amending the General QM loan definition and which it plans to issue it at a later date.

"The ATR/QM Rule also created the GSE Patch as a temporary QM definition. The GSE Patch provides QM status to certain mortgage loans eligible for purchase or guarantee by either of the GSEs," according to the CFPB.

"GSE Patch loans are eligible for QM status even if the DTI ratio exceeds 43 percent. The Bureau estimates that, after the GSE Patch expires, some of these loans would either not be made or would be made but at a higher price."

Unfortunately for Non-QM lenders, the extension means that they won't be seeing an increase in loans that fall outside of that QM bucket as many would have hoped. 

Click here to learn more about the CFPB's final rule extending the GSE Patch.

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