The Consumer Financial Protection Bureau (CFPB) issued final rules related to qualified mortgage (QM) loans, one on a General QM one on the new, “Seasoned” QM.

The General QM final rule replaces the current requirement for General QM loans that the consumer’s debt-to-income ratio (DTI) not exceed 43% with a limit based on the loan’s pricing.

The General QM final rule also:

• Provides higher pricing thresholds for loans with smaller loan amounts, for certain manufactured housing loans, and for subordinate-lien transactions.
• Retains the General QM loan definition’s existing product-feature and underwriting requirements and limits on points and fees.
• Requires lenders to consider a consumer’s DTI ratio or residual income, income or assets other than the value of the dwelling, and debts and removes appendix Q and provides more flexible options for creditors to verify the consumer’s income or assets other than the value of the dwelling and the consumer’s debts for QM loans.

CUNA supported the proposed General QM, believing it is an important step in turning the General QM into a viable option for credit union originations.

The second final rule issued creates a new category for QMs, Seasoned QMs, for first-lien, fixed-rate covered transactions that have met certain performance requirements, are held in portfolio by the originating creditor or first purchaser for a 36-month period, comply with general restrictions on product features and points and fees and meet certain underwriting requirements.

Specifically, the loan can have no more than two delinquencies of 30 or more days and no delinquencies of 60 or more days at the end of the seasoning period.

CUNA said in its comments on the proposed rule the Seasoned QM will aid residential mortgage expansion.

The rules will take effect 60 days after their publication in the Federal Register.

The General QM Final Rule will have a mandatory compliance date of July 1, 2021.  The Seasoned QM Final Rule will apply to covered transactions for which creditors receive an application on or after the effective date.