Final Rule Qualified Mortgage Definition under the Truth in Lending Act (Regulation Z): Seasoned QM Loan Definition

Updated 12/18/2020

The Consumer Finance Protection Bureau proposed changes to facilitate a smooth and orderly transition away from the Temporary government-sponsored enterprises (GSEs) Qualified Mortgage (QM) loan definition and to ensure access to responsible, affordable mortgage credit upon its expiration. With this Final Rule, the CFPB is creating a new category of QMs (Seasoned QMs) for first-lien, fixed-rate covered transactions that have met certain performance requirements over a 36-month seasoning period, are held in portfolio until the end of the seasoning period, comply with general restrictions on product features and points and fees, and meet certain underwriting requirements. The requirements to become a Seasoned QM are:

  1. The loan is secured by a first lien
  2. The loan has a fixed rate, with regular, substantially equal periodic payments that are fully amortizing and no balloon payments
  3. The loan term does not exceed 30 years, and
  4. The loan is not a high-cost mortgage as defined in ยง1026.32(a)

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