CFPB Extends Temporary QM Allowance for Fannie Mae and Freddie Mac Loans

For those of you that originate Fannie Mae and/or Freddie Mac loans, you know there is qualified mortgage (QM) status available for loans that are eligible to be purchased or guaranteed by Fannie or Freddie.  To be QMs, such loans must also have substantially equal payments; the loan term cannot exceed 30 years and the points and fees cannot exceed certain thresholds. 

This rule for Fannie/Freddie loans has been available since the ATR/QM rule went into effect but was designed to be temporary and expire January 10, 2021.  The CFPB recently issued a Final Rule to extend this date until changes can be made to the standard QM definition.  This means that loans eligible for purchase or guarantee by Fannie or Freddie will be eligible for QM status if the application is received before any mandatory compliance date related to changing the standard QM definition. 

The CFPB has not yet issued a final rule to make changes to the standard QM definition, so any mandatory compliance date is up in the air at this point.  If you originate loans eligible for purchase or guarantee by Fannie or Freddie, the important thing to know is that this Final Rule ensures those loans can retain their QM status after January 10th.  Without it, QM status for such loans could have been lost, the way the regulation is currently written.  The CFPB does not want the temporary category of QMs for Fannie/Freddie loans to expire without other QM options in place, which is at least one reason the standard QM definition will be revised.

On another note, don’t forget that the CFPB has also proposed a new option for QM status, the “Seasoned QM”.

As always, stay tuned!

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