New Ability-to-Repay (ATR) and Qualified Mortgage (QM) Rules

The CFPB has updated amended its rules on criteria for certain consumer-purpose mortgage loans to be protected from legal action, called the “Qualified Mortgage” rules. This is due in no small part to the expiration of the so-called “GSE Patch,” which allowed some loans with excessive Debt-to-Income (DTI) ratios to qualify. This test has been replaced with a pricing standard dependent on the loan’s APR. As well, a new category of Qualified Mortgages, called “Seasoned QMs,” has been introduced, which will allow for loans with three years’ of good payment history to gain the protections. We’ll discuss these requirements and how they may impact your institution.This is due in no small part to the expiration of the so-called “GSE Patch,” which allowed some loans with excessive Debt-to-Income (DTI) ratios to qualify. This test has been replaced with a pricing standard dependent on the loan’s APR. As well, a new category of Qualified Mortgages, called “Seasoned QMs,” has been introduced, which will allow for loans with three years’ of good payment history to gain the protections. We’ll discuss these requirements and how they may impact your institution.

Covered Topics

  • New Qualified Mortgage (QM) Rules
  • Types of Qualified Mortgages
  • Revised Qualified Mortgage (QM) Rules
  • The “GSE Patch”
  • New Seasoned QM Rule
  • Seasoned QM Requirements