Consumer advocates and lenders are concerned about a key part of the Consumer Financial Protection Bureau’s (CFPB) new “qualified mortgage” rule. The rule, which would end an exception given to QM loans bought by Fannie Mae and Freddie Mac, is concerning both groups due to fears that loans to borrowers with DTI limits above 43% will no longer be eligible to be sold to Fannie or Freddie. They believe this will make lenders far less likely to originate the loans and, in turn, will deliver a major hit to the market. The QM patch is set to expire in January 2021 and the CFPB is considering a short extension to “facilitate a smooth and orderly transition”. However, several lenders, trade associations, consumer advocates and civil rights groups have signed a draft letter proposing that the rule eliminate the limit and “allow the QM definition be based solely on safe product features.”
Read more via American Banker.