Regulation Z requires creditors to make a reasonable, good faith determination of a consumer’s ability to repay certain residential mortgage loan, and loans that meet Regulation Z’s requirements for “qualified mortgages” (QMs) obtain certain protections from liability. One category of QMs is loans that are eligible for purchase or guarantee by either the Fannie Mae or Freddie Mac. This category, typically referred to as “Temporary GSE QMs,” is scheduled to expire January 10, 2021.  Recognizing the expiration could cause disruption in the mortgage market, CFPB issued an advance notice of proposed rulemaking (ANPR) to collect information on ways to amend the definition of the General QM mitigate disruption and facilitate a smooth transition. 

WBA recommended the definition of the General Qualified Mortgage be amended to more closely align with provisions of the Temporary QM—namely eliminating the 43% DTI requirement and Appendix Q. Read the letter here.