On 12/10/2020, the CFPB issued two new final rules that update the Qualified Mortgage (QM) rules. Specifically, some changes have been made to the QM definitions in order to transition away from the “Temporary GSE” QM definition which is set to expire in the coming months. As you would expect, this topic will be covered in our upcoming Winter 2021 Quarterly Compliance Update that will be available in our store in early 2021.

On 10/20/2020, the Consumer Financial Protection Bureau (CFPB) issued a final rule to extend the Government-Sponsored Enterprise (GSE) Qualified Mortgage (QM) definition, known as the “GSE Patch”, until the upcoming amendments to the General Qualified Mortgage QM definition are finalized. The GSE Patch was set to expired on 1/10/2021, and this extension of the GSE QM definition will ensure a smooth transition for those who rely on secondary market underwriting for many of their Qualified Mortgages.

On 8/18/2020, the CFPB issued a proposal to create a new category of seasoned qualified mortgages, referenced as “Seasoned QMs.” According to the CFPB’s release, loans could qualify as Seasoned QMs if they are “first-lien, fixed-rate covered transactions that have met certain performance requirements over a 36-month seasoning period.”

In July of 2020, the CFPB published a number of annual threshold adjustments in the Federal Register related to Regulation Z. Effective January 1, 2021, a Regulation Z final rule implements the Truth in Lending Act and satisfies the CFPB’s requirement to calculate annually the dollar amounts for several provisions in Regulation Z. While most of these thresholds will most likely be updated by a financial institution’s loan operating software (LOS) provider, managers should ensure these threshold changes are appropriately made.

On 7/7/2020, the CFPB issued a final rule on small dollar lending which rescinds the mandatory underwriting provisions of the 2017 rule but does not rescind or alter the payments provisions of the 2017 rule. In their release, the CFPB stated…

On 7/2/2020, the CFPB released a notice of proposed rulemaking that would change Regulation Z to provide a new exemption available to certain banks and credit unions from the requirements to establish escrow accounts for certain higher-priced mortgage loans (HPMLs). This proposal is the Bureau’s last required rule under the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA).

In June of 2020, the CFPB proposed two new rules to adjust the current Qualified Mortgage rules. The CFPB states that their objective with these proposals is to facilitate a smooth and orderly transition away from the Temporary GSE QM loan definition (which is a temporary QM category set to expire on 1/10/2021 that basically qualifies a mortgage as a QM if it is eligible for purchase or guarantee by Fannie or Freddie) and to ensure access to responsible, affordable mortgage credit upon its expiration.

On 6/23/2020, the CFPB issued an interpretive rule to provide guidance to creditors information on the way in which the CFPB determines which counties qualify as “underserved” for a given calendar year. The CFPB’s list of rural and underserved counties and areas is used by financial institutions for two main purposes: 1) for an exemption from the requirement to establish an escrow account for higher-priced mortgage loans and 2) to qualify for the ability to originate balloon-payment qualified mortgages and balloon-payment high cost mortgages.