The New Qualified Mortgage Rules: What Are They And What Impact Will They Have?
During the final months of the Trump Administration, the CFPB announced a series of updates to rules affecting the non-Agency mortgage finance market, including the GSE Patch, the QM rules, and rules affecting seasoned QM loans. We refer in this paper to these rules as the “Temporary GSE Patch Final Rule”, the “Revised Final Rule” and the “Seasoned QM Final Rule” respectively.
In early March 2021, during the first weeks of the Biden Administration, the Revised Final Rule and Seasoned QM Final Rule went into effect. While the timing and full extent of the impact of these rules are not yet fully clear, these developments were welcomed by many participants in the mortgage finance industry, because they suggest a more level playing field between the public and private mortgage sectors may be on the horizon.
This brief paper is being issued by Redwood Trust, a leader in expanding access to housing for homebuyers and renters, to share our understanding of the state of play regarding the rules defining Qualified Mortgages and the potential impact on the market.
We’re offering perspective now because many participants in the mortgage market are still trying to determine how the new Revised Final Rule might change the way mortgages are underwritten and what opportunities and considerations it might create for investors. The output of these determinations will ultimately be felt by borrowers, both in the steps required to procure a mortgage and, by extension, borrowing costs. With the early 2021 guidance from the CFPB that it may “revisit” the Revised Final Rule, industry participants would greatly benefit from some clarity since such rule is currently in effect.