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CFPB Wants Your Comments on New Kind of QM
Wednesday, August 19, 2020
The Consumer Financial Protection Bureau
(CFPB) is proposing a new category of qualified mortgage (QM) which it says is
intended to "encourage innovation and help ensure access to responsible,
affordable in the mortgage credit market." (we assume they meant "affordable credit in the mortgage market.") The category, "seasoned qualified
mortgages" involves, as the name suggests, holding riskier loans in the
originator's own portfolio for three years. It is unclear, from the notice of
proposed rulemaking (NPRM) issued on Wednesday, who will then assume or
securitize the loans. To be considered a Seasoned QM under the
proposal, loans would have to be first-lien, fixed-rate covered transactions
that have met certain performance requirements over a 36-month seasoning
period. In addition to the in-portfolio requirement, the loan must comply
with general restrictions on product features and points and fees and meet
certain underwriting requirements. These include that the creditor verify the
consumer's debt-to-income ratio (DTI) or residual income at origination and
during the seasoning period.
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