The Consumer Financial Protection Bureau extended the government-sponsored enterprise "patch," which exempts Fannie Mae and Freddie Mac mortgage loans from parts of the Qualified Mortgage rule.
The patch provides QM status to loans purchased or guaranteed by the GSEs even if they exceed the rule's 43 percent debt-to-income limit. Previously scheduled to expire on Jan. 10, 2021, the CFPB extended the patch until the mandatory compliance date of a pending rule to amend the QM loan definition in Regulation Z.
ICBA supports extending the GSE patch to facilitate a smooth transition to the final QM rule but has serious concerns with the CFPB proposal's use of loan pricing to determine the borrower's ability to repay a loan.
In a comment letter last month, ICBA said a maximum debt-to-income ratio metric should remain as a measure of borrowers' ability to repay, noting that a price-based approach could be easily manipulated and would favor the largest mortgage lenders.