Proposed Rule Summary: QM Definition Under TILA (Reg Z): Extension of Sunset Date, General QM Loan Definition, Seasoned QM Definition

Updated 09/14/2020

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.

  1. Extend the Temporary GSE QM loan definition in Regulation Z until the effective date of final amendments to the General QM loan definition in Reg Z (or when the GSEs cease to operate under the conservatorship of the Federal Housing Finance Agency (FHFA)).
  2. Remove the QM loan definition’s 43 percent debt-to-income (DTI) limit and replace it with a price-based threshold.
  3. Create 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.

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