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Federal Register/Vol. 85, No. 133/Friday, July 10, 2020/Proposed 41716 Federal Register / Vol. 85, No. 133 / Friday, July 10, 2020 / Proposed Rules BUREAU OF CONSUMER FINANCIAL transition away from the Temporary Steven Wrone, Senior Counsels, Office PROTECTION GSE QM loan definition and to ensure of Regulations, at 202–435–7700. If you access to responsible, affordable require this document in an alternative 12 CFR Part 1026 mortgage credit upon its expiration. electronic format, please contact CFPB_ [Docket No. CFPB–2020–0020] DATES: Comments must be received on [email protected]. or before September 8, 2020. SUPPLEMENTARY INFORMATION: RIN 3170–AA98 ADDRESSES: You may submit comments, I. Summary of the Proposed Rule Qualified Mortgage Definition Under identified by Docket No. CFPB–2020– 0020 or RIN 3170–AA98, by any of the The Ability-to-Repay/Qualified the Truth in Lending Act (Regulation Mortgage Rule (ATR/QM Rule or Rule) Z): General QM Loan Definition following methods: • Federal eRulemaking Portal: requires a creditor to make a reasonable, good faith determination of a AGENCY: Bureau of Consumer Financial https://www.regulations.gov. Follow the Protection. instructions for submitting comments. consumer’s ability to repay a residential • Email: 2020-NPRM-ATRQM- mortgage loan according to its terms. ACTION: Proposed rule with request for Loans that meet the Rule’s requirements public comment. [email protected]. Include Docket No. CFPB–2020–0020 or RIN 3170– for qualified mortgages (QMs) obtain SUMMARY: With certain exceptions, AA98 in the subject line of the message. certain protections from liability. The Regulation Z requires creditors to make • Mail/Hand Delivery/Courier: Rule defines several categories of QMs. One QM category defined in the Rule a reasonable, good faith determination Comment Intake—General QM is the General QM loan category. of a consumer’s ability to repay any Amendments, Bureau of Consumer General QM loans must comply with the residential mortgage loan, and loans that Financial Protection, 1700 G Street NW, Rule’s prohibitions on certain loan meet Regulation Z’s requirements for Washington, DC 20552. Please note that features, its points-and-fees limits, and ‘‘qualified mortgages’’ (QMs) obtain due to circumstances associated with its underwriting requirements. For certain protections from liability. One the COVID–19 pandemic, the Bureau General QM loans, the ratio of the category of QMs is the General QM loan discourages the submission of comments by mail, hand delivery, or consumer’s total monthly debt to total category. For General QM loans, the monthly income (DTI) ratio must not ratio of the consumer’s total monthly courier. Instructions: The Bureau encourages exceed 43 percent. The Rule requires debt to total monthly income (DTI ratio) that creditors must calculate, consider, must not exceed 43 percent. In this the early submission of comments. All submissions should include the agency and verify debt and income for purposes notice of proposed rulemaking, the of determining the consumer’s DTI ratio Bureau proposes certain amendments to name and docket number or Regulatory Information Number (RIN) for this using the standards contained in the General QM loan definition in appendix Q of Regulation Z. Regulation Z. Among other things, the rulemaking. Because paper mail in the Washington, DC area and at the Bureau A second, temporary category of QM Bureau proposes to remove the General loans defined in the Rule consists of is subject to delay, and in light of QM loan definition’s 43 percent DTI mortgages that (1) comply with the same difficulties associated with mail and limit and replace it with a price-based loan-feature prohibitions and points- hand deliveries during the COVID–19 threshold. Another category of QMs is and-fees limits as General QM loans and pandemic, commenters are encouraged loans that are eligible for purchase or (2) are eligible to be purchased or to submit comments electronically. In guarantee by either the Federal National guaranteed by the GSEs while under the general, all comments received will be Mortgage Association (Fannie Mae) or conservatorship of the FHFA. This posted without change to https:// the Federal Home Loan Mortgage proposal refers to these loans as www.regulations.gov. In addition, once Corporation (Freddie Mac) (government- Temporary GSE QM loans, and the the Bureau’s headquarters reopens, sponsored enterprises, or GSEs), while provision that created this loan category operating under the conservatorship or comments will be available for public is commonly known as the GSE Patch. receivership of the Federal Housing inspection and copying at 1700 G Street Unlike for General QM loans, the Rule Finance Agency (FHFA). The GSEs are NW, Washington, DC 20552, on official does not prescribe a DTI limit for currently under Federal business days between the hours of 10 Temporary GSE QM loans. Thus, a loan conservatorship. The Bureau established a.m. and 5 p.m. Eastern Time. At that can qualify as a Temporary GSE QM this category of QMs (Temporary GSE time, you can make an appointment to loan even if the consumer’s DTI ratio QM loans) as a temporary measure that inspect the documents by telephoning exceeds 43 percent, so long as the loan is set to expire no later than January 10, 202–435–9169. is eligible to be purchased or guaranteed 2021 or when the GSEs exit All comments, including attachments by either of the GSEs. In addition, for conservatorship. In a separate proposal and other supporting materials, will Temporary GSE QM loans, the Rule released simultaneously with this become part of the public record and does not require creditors to use proposal, the Bureau proposes to extend subject to public disclosure. Proprietary appendix Q to determine the the Temporary GSE QM loan definition information or sensitive personal consumer’s income, debt, or DTI ratio. to expire upon the effective date of final information, such as account numbers Under the Rule, the Temporary GSE amendments to the General QM loan or Social Security numbers, or names of QM loan definition expires with respect definition in Regulation Z (or when the other individuals, should not be to each GSE when that GSE exits GSEs cease to operate under the included. Comments will not be edited conservatorship or on January 10, 2021, conservatorship of the FHFA, if that to remove any identifying or contact whichever comes first. The GSEs are happens earlier). In this present information. currently in conservatorship. Despite proposed rule, the Bureau proposes the FOR FURTHER INFORMATION CONTACT: the Bureau’s expectations when the amendments to the General QM loan Benjamin Cady or Waeiz Syed, Rule was published in 2013, Temporary definition that are referenced in that Counsels, or Sarita Frattaroli, David GSE QM loan originations continue to separate proposal. The Bureau’s Friend, Joan Kayagil, Mark Morelli, represent a large and persistent share of objective with these proposals is to Amanda Quester, Alexa Reimelt, Marta the residential mortgage loan market. A facilitate a smooth and orderly Tanenhaus, Priscilla Walton-Fein, or significant number of Temporary GSE VerDate Sep<11>2014 19:48 Jul 09, 2020 Jkt 250001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4702 E:\FR\FM\10JYP2.SGM 10JYP2 jbell on DSKJLSW7X2PROD with PROPOSALS2 Federal Register / Vol. 85, No. 133 / Friday, July 10, 2020 / Proposed Rules 41717 QM loans would not qualify as General consider the consumer’s income or covered transactions for which creditors QM loans under the current regulations assets, debt obligations, and DTI ratio or receive an application on or after this after the Temporary GSE QM loan residual income and verify the effective date. The Bureau tentatively definition expires. These loans would consumer’s current or reasonably determines that a six-month period not qualify as General QM loans either expected income or assets other than the between Federal Register publication of because the consumer’s DTI ratio is value of the dwelling (including any a final rule and the final rule’s effective above 43 percent or because the real property attached to the dwelling) date would give creditors enough time creditor’s method of documenting and that secures the loan and the consumer’s to bring their systems into compliance verifying income or debt does not current debt obligations, alimony, and with the revised regulations. The comply with appendix Q. Although child support. The proposal would Bureau does not intend to issue a final alternative loan options, including some remove appendix Q. To prevent rule amending the General QM loan other types of QM loans, would still be uncertainty that may result from definition early enough for it to take available to many consumers who could appendix Q’s removal, the proposal effect before April 1, 2021. The Bureau not qualify for General QM loans, the would clarify the requirements to requests comment on this proposed Bureau’s analysis of available data consider and verify a consumer’s effective date. The Bureau specifically indicates that many loans that are income, assets, debt obligations, seeks comment on whether there is a currently Temporary GSE QM loans alimony, and child support. The day of the week or time of month that would cost materially more for proposal would preserve the current would most facilitate implementation of consumers and many would not be threshold separating safe harbor from the proposed changes. made at all. rebuttable presumption QMs, under II. Background In a separate proposal (Extension which a loan is a safe harbor QM if its Proposal) released simultaneously with APR exceeds APOR for a comparable A. Dodd-Frank Act Amendments to the this proposal, the Bureau proposes to transaction by less than 1.5 percentage Truth in Lending Act extend the Temporary GSE QM loan points as of the date the interest rate is The Dodd-Frank Wall Street Reform definition to expire upon the effective set (or by less than 3.5 percentage points and Consumer Protection Act (Dodd- date of final amendments to the General for subordinate-lien transactions).
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