The loan’s points and fees do not exceed the three percent threshold or the other specified applicable limit.The loan is not subject to the Home Ownership and Equity Protection Act.The loan term does not exceed 30 years.The loan has a fixed rate, with regular, substantially equal periodic payments that are fully amortizing and no balloon payments.In order to become eligible to become a “Seasoned QM”, and hence, receive a safe harbor from ATR liability at the end of the 36- month seasoning period, the loan must meet the following criteria: The CFPB’s stated purpose of the rule is to “enhance access to affordable mortgage credit”, and to incentivize “the origination of non-QM and ‘rebuttable presumption’ QM loans that a creditor expects to demonstrate a sustained and timely payment history.” Criteria for a “Seasoned QM” In the “Seasoned QM” rule, a non-QM loan or “rebuttable presumption” QM receives a safe harbor from ATR liability at the end of a seasoning period of at least 36 months as a “Seasoned QM” if it satisfies certain product restrictions, points-and-fees limits, and underwriting requirements, and the loan meets the designated performance and portfolio requirements during the seasoning period. In order to qualify for QM status, the loan must meet the statutory requirements regarding the three percent points and fees limits, and must not contain negative amortization, a balloon payment (except in the existing limited circumstances), or a term exceeding 30 years. Loans with higher APRs than the thresholds noted above are designated as non-QMs. The revised general QM rule provides for higher thresholds for loans with smaller loan amounts, for subordinate-lien transactions, and for certain manufactured housing loans. Under the revised general QM rule, for first-lien transactions, a loan receives a conclusive presumption that the consumer had the ability to repay (and hence receives the “safe harbor” presumption of QM compliance) if the APR does not exceed the APOR for a comparable transaction by 1.5 percentage points or more as of the date the interest rate is set.Ī first-lien loan receives a “rebuttable presumption” that the consumer had the ability to repay if the APR exceeds the APOR for a comparable transaction by 1.5 percentage points or more but by less than 2.25 percentage points. The “Seasoned QM” rule is effective with respect to applications received on or after March 1, 2021. The CFPB promulgated this “Seasoned QM” rulemaking simultaneously with the rule that terminates the “QM Patch” and amends the general QM rules (as discussed in our December 28 post). A&B ABstract: On December 10, 2020, the Consumer Financial Protection Bureau (CFPB) issued an innovative final rulemaking that creates a pathway to “safe harbor” Qualified Mortgage (QM) status for performing non-QM and “rebuttable presumption” QM loans that meet certain performance criteria portfolio requirements over a seasoning period of at least 36 months and that satisfy certain product restrictions, points and fees limits, and underwriting requirements prior to consummation.
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