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estimated production (585,000,000 USDA has not identified any relevant Qualified Mortgage Definition under the kernelweight pounds), which equals the Federal rules that duplicate, overlap, or Truth in Lending Act (Regulation Z): assessment revenue of $14,625,000. The conflict with this proposed rule. General QM Loan Definition (General grower revenue is calculated by A small business guide on complying QM Final Rule) until October 1, 2022. multiplying the grower price of $1,970 with fruit, vegetable, and specialty crop DATES: Comments must be received on per ton ($0.99 per kernelweight pound) marketing agreements and orders may or before April 5, 2021. times the estimated production be viewed at: https:// (585,000,000 kernelweight pounds), www.ams.usda.gov/rules-regulations/ ADDRESSES: You may submit comments, which equals the grower revenue of moa/small-businesses. Any questions identified by Docket No. CFPB–2021– $579,150,000. In the final step, dividing about the compliance guide should be 0003 or RIN 3170–AA98, by any of the the assessment revenue by the grower sent to Richard Lower at the previously following methods: revenue, indicates that, for the 2020–21 mentioned address in the FOR FURTHER • Federal eRulemaking Portal: http:// marketing year, the estimated INFORMATION CONTACT section. www.regulations.gov. Follow the assessment revenue as a percentage of A 30-day comment period is provided instructions for submitting comments. total grower revenue would be about 2.5 to allow interested persons to respond • Email: 2021-NPRM- percent. to this proposed rule. [email protected]. This proposed rule would decrease List of Subjects in 7 CFR Part 984 Include Docket No. CFPB–2021–0003 or the assessment obligation imposed on RIN 3170–AA98 in the subject line of handlers. Assessments are applied Marketing agreements, Reporting and the message. uniformly on all handlers, and some of recordkeeping requirements, and • Mail/Hand Delivery/Courier: the costs may be passed on to growers. Walnuts. Comment Intake—QM Compliance Date However, decreasing the assessment rate For the reasons set forth in the Delay, Bureau of Consumer Financial reduces the burden on handlers and preamble, 7 CFR part 984 is proposed to Protection, 1700 G Street NW, may also reduce the burden on growers. be amended as follows: Washington, DC 20552. The Board’s meeting was widely PART 984—WALNUTS GROWN IN Instructions: The Bureau encourages publicized throughout the California CALIFORNIA the early submission of comments. All walnut industry. All interested persons submissions should include the agency were invited to attend the meeting and ■ 1. The authority citation for 7 CFR name and docket number or Regulatory participate in Board deliberations on all part 984 continues to read as follows: Information Number (RIN) for this issues. Like all Board meetings, the rulemaking. Because paper mail in the Authority: 7 U.S.C. 601–674. September 11, 2020, meeting was a Washington, DC, area and at the Bureau public meeting and all entities, both ■ 2. Section 984.347 is revised to read is subject to delay, and in light of large and small, were able to express as follows: difficulties associated with mail and views on this issue. Interested persons hand deliveries during the COVID–19 § 984.347 Assessment rate. are invited to submit comments on this pandemic, commenters are encouraged proposed rule, including the regulatory On and after September 1, 2020, an to submit comments electronically. In and information collection impacts of assessment rate of $0.0250 per general, all comments received will be this action on small businesses. kernelweight pound is established for posted without change to https:// California merchantable walnuts. In accordance with the Paperwork www.regulations.gov. In addition, once Reduction Act of 1995 (44 U.S.C. Bruce Summers, the Bureau’s headquarters reopens, Chapter 35), the Order’s information Administrator, Agricultural Marketing comments will be available for public collection requirements have been Service. inspection and copying at 1700 G Street previously approved by the OMB and [FR Doc. 2021–04569 Filed 3–4–21; 8:45 am] NW, Washington, DC 20552, on official business days between the hours of 10 assigned OMB No. 0581–0178 Vegetable BILLING CODE P and Specialty Crops. No changes in a.m. and 5 p.m. Eastern Time. You can those requirements would be necessary make an appointment to inspect the as a result of this proposed rule. Should documents by telephoning 202–435– BUREAU OF CONSUMER FINANCIAL 7275. any changes become necessary, they PROTECTION would be submitted to OMB for All comments, including attachments approval. 12 CFR Part 1026 and other supporting materials, will become part of the public record and This proposed rule would not impose [Docket No. CFPB–2021–0003] any additional reporting or subject to public disclosure. Proprietary recordkeeping requirements on either RIN 3170–AA98 information or sensitive personal small or large California walnut information, such as account numbers handlers. As with all Federal marketing Qualified Mortgage Definition Under or Social Security numbers, or names of order programs, reports and forms are the Truth in Lending Act (Regulation other individuals, should not be periodically reviewed to reduce Z): General QM Loan Definition; Delay included. Comments will not be edited information requirements and of Mandatory Compliance Date to remove any identifying or contact information. duplication by industry and public AGENCY: Bureau of Consumer Financial sector agencies. Protection. FOR FURTHER INFORMATION CONTACT: Ben AMS is committed to complying with ACTION: Proposed rule; request for Cady, Mark Morelli, Amanda Quester, the E-Government Act, to promote the comment. or Priscilla Walton-Fein, Senior use of the internet and other Counsels, Office of Regulations, at 202– information technologies to provide SUMMARY: The Bureau of Consumer 435–7700. If you require this document increased opportunities for citizen Financial Protection (Bureau) is in an alternative electronic format, access to Government information and proposing to delay the mandatory please contact CFPB_Accessibility@ services, and for other purposes. compliance date of the final rule titled cfpb.gov.

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SUPPLEMENTARY INFORMATION: creditors would have the option of before the current July 1, 2021 complying with either the revised mandatory compliance date. I. Summary of the Proposed Rule General QM loan definition or the II. Background The Ability-to-Repay/Qualified General QM loan definition in effect Mortgage Rule (ATR/QM Rule) requires prior to March 1, 2021. Under the A. Dodd-Frank Act Amendments to the a creditor to make a reasonable, good proposal, the revised regulations would Truth in Lending Act and the January faith determination of a consumer’s apply to covered transactions for which 2013 Final Rule ability to repay a residential mortgage creditors receive an application on or The Dodd-Frank Wall Street Reform loan according to its terms. Loans that after October 1, 2022. meet the ATR/QM Rule’s requirements and Consumer Protection Act (Dodd- The ATR/QM Rule also defines a 3 for qualified mortgages (QMs) obtain Frank Act) amended the Truth in second, temporary category of QMs for Lending Act (TILA) 4 to establish, certain protections from liability. The mortgages that (1) comply with the same ATR/QM Rule defines several categories among other things, ability-to-repay loan-feature prohibitions and points- (ATR) requirements in connection with of QMs. and-fees limits as General QMs and (2) One QM category defined in the ATR/ the origination of most residential are eligible to be purchased or mortgage loans.5 As amended by the QM Rule is the General QM category. guaranteed by either the Federal General QMs must comply with the Dodd-Frank Act, TILA prohibits a National Mortgage Association (Fannie creditor from making a residential ATR/QM Rule’s prohibitions on certain Mae) or the Federal Home Loan loan features, its points-and-fees limits, mortgage loan unless the creditor makes Mortgage Corporation (Freddie Mac) and its underwriting requirements. a reasonable and good faith (collectively, the government-sponsored Under the original ATR/QM Rule, the determination based on verified and enterprises or GSEs), while operating ratio of the consumer’s total monthly documented information that the under the conservatorship or debt to total monthly income (DTI or consumer has a reasonable ability to receivership of the Federal Housing DTI ratio) could not exceed 43 percent repay the loan.6 TILA identifies the Finance Agency (FHFA). This proposed for a loan to meet the General QM loan factors a creditor must consider in rule refers to these loans as Temporary definition. In December 2020, the making a reasonable and good faith GSE QM loans, and the provision that Bureau issued the General QM Final assessment of a consumer’s ability to created this loan category is commonly Rule, which amended Regulation Z by repay. These factors are the consumer’s replacing the General QM loan known as the GSE Patch. In October credit history, current and expected definition’s DTI limit with a limit based 2020, the Bureau issued a final rule income, current obligations, DTI ratio or on loan pricing and making other stating that the Temporary GSE QM loan residual income after paying non- changes to the General QM loan definition will be available only for mortgage debt and mortgage-related definition.1 The General QM Final Rule covered transactions for which the obligations, employment status, and took effect on March 1, 2021, and it creditor receives the consumer’s other financial resources other than provides a mandatory compliance date application before the mandatory equity in the dwelling or real property of July 1, 2021. For covered transactions compliance date of the General QM that secures repayment of the loan.7 2 for which creditors receive an Final Rule. Therefore, under the A creditor may not be certain whether application on or after the March 1, proposal, the Temporary GSE QM loan its ATR determination is reasonable in 2021 effective date and before the July definition would expire upon the earlier a particular case. TILA addresses this 1, 2021 mandatory compliance date, of October 1, 2022 or the date the potential uncertainty by defining a creditors have the option of complying applicable GSE exits Federal category of loans—called QMs—for with either the revised General QM loan conservatorship (rather than on the which a creditor ‘‘may presume that the definition or the General QM loan current mandatory compliance date of loan has met’’ the ATR requirements.8 definition in effect prior to March 1, July 1, 2021 or the date the applicable The statute generally defines a QM to 2021. Only the revised General QM loan GSE exits Federal conservatorship). mean any residential mortgage loan for definition is available for applications As discussed below, the Bureau is which: received on or after July 1, 2021. proposing to delay the mandatory • The loan does not have negative The Bureau is proposing to delay the compliance date of the General QM amortization, interest-only payments, or mandatory compliance date of the Final Rule to help ensure access to balloon payments; General QM Final Rule until October 1, responsible, affordable mortgage credit • The loan term does not exceed 30 2022. Specifically, the proposal would and to preserve flexibility for years; amend comments 43–2 and 43(e)(4)–2 consumers, particularly those affected by the COVID–19 pandemic. This and –3 to reflect an extension of the 3 Dodd-Frank Wall Street Reform and Consumer mandatory compliance date of the proposal would not make other changes Protection Act, Public Law 111–203, 124 Stat. 1376 General QM Final Rule by changing the to the General QM loan definition. The (2010). date ‘‘July 1, 2021’’ where it appears in Bureau plans to evaluate the General 4 15 U.S.C. 1601 et seq. 5 those comments to ‘‘October 1, 2022.’’ QM Final Rule’s amendments to the Dodd-Frank Act sections 1411–12, 1414, 124 General QM loan definition and will Stat. 1376, 2142–49; 15 U.S.C. 1639c. The proposal would also add new 6 15 U.S.C. 1639c(a)(1). TILA section 103 defines comment 43(e)(2)–1 to clarify the consider at a later date whether to ‘‘residential mortgage loan’’ to mean, with some General QM loan definitions available to initiate another rulemaking to exceptions including open-end credit plans, ‘‘any creditors for applications received on or reconsider other aspects of the General consumer credit transaction that is secured by a QM Final Rule. mortgage, deed of trust, or other equivalent after March 1, 2021 but prior to October consensual security interest on a dwelling or on 1, 2022. The Bureau proposes that a final rule residential real property that includes a dwelling.’’ If this proposal is finalized, for based on this proposal be effective 60 15 U.S.C. 1602(dd)(5). TILA section 129C also covered transactions for which creditors days after publication in the Federal exempts certain residential mortgage loans from the Register. The Bureau anticipates that ATR requirements. See, e.g., 15 U.S.C. 1639c(a)(8) receive an application on or after March (exempting reverse mortgages and temporary or 1, 2021 and before October 1, 2022, this would make the final rule effective bridge loans with a term of 12 months or less). 7 15 U.S.C. 1639c(a)(3). 1 85 FR 86308 (Dec. 29, 2020). 2 85 FR 67938 (Oct. 26, 2020). 8 15 U.S.C. 1639c(b)(1).

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• The total points and fees generally using the maximum rate permitted the rule or order.22 In January 2019, the do not exceed 3 percent of the loan during the first five years; 14 Bureau published its ATR/QM Rule amount; • The creditor considers and verifies Assessment Report.23 During the period • The income and assets relied upon the consumer’s income and debt leading up to and following the issuance for repayment are verified and obligations in accordance with of the Assessment Report, the Bureau documented; appendix Q; 15 and solicited and received substantial public • The underwriting uses a monthly • The consumer’s DTI ratio is no and stakeholder input on issues related payment based on the maximum rate more than 43 percent, determined in to the ATR/QM Rule.24 during the first five years, uses a accordance with appendix Q.16 On July 25, 2019, the Bureau issued payment schedule that fully amortizes Appendix Q contained standards for an advance notice of proposed the loan over the loan term, and takes calculating and verifying debt and rulemaking regarding the ATR/QM Rule into account all mortgage-related income for purposes of determining (ANPR). The ANPR stated the Bureau’s obligations; and whether a mortgage satisfies the 43 tentative plans to allow the Temporary • The loan complies with any percent DTI limit for General QMs. The GSE QM loan definition to expire in guidelines or regulations established by standards in appendix Q were adapted January 2021 or after a short extension. the Bureau relating to the ratio of total from guidelines maintained by Federal The Bureau also stated that it was monthly debt to monthly income or Housing Administration (FHA) when considering whether to propose alternative measures of ability to pay the January 2013 Final Rule was revisions to the General QM loan regular expenses after payment of total issued.17 definition in light of the potential monthly debt.9 A second category of QMs defined by expiration of the Temporary GSE QM In January 2013, the Bureau issued a the January 2013 Final Rule, Temporary loan definition and requested comments final rule amending Regulation Z to GSE QMs, consisted of mortgages that on several topics related to the General implement TILA’s ATR requirements (1) comply with the ATR/QM Rule’s QM loan definition.25 (January 2013 Final Rule).10 The prohibitions on certain loan features January 2013 Final Rule became and its limitations on points and fees 18 C. The Bureau’s 2020 QM Final Rules effective on January 10, 2014. This and (2) are eligible to be purchased or In 2020, the Bureau issued three final proposal refers to the January 2013 Final guaranteed by either GSE while under rules related to the ATR/QM Rule: The Rule and later amendments 11 to it the conservatorship of the FHFA.19 Patch Extension Final Rule, the General collectively as the ATR/QM Rule or the Unlike for General QMs, the January QM Final Rule, and the Seasoned QM Rule. The ATR/QM Rule implements 2013 Final Rule did not prescribe a DTI Final Rule. These final rules are the statutory ATR provisions discussed limit for Temporary GSE QMs nor did discussed below. above and defines several categories of it require use of appendix Q to verify 1. The Patch Extension Final Rule QMs, two of which are discussed and calculate debt, income, and DTI below.12 ratios. The January 2013 Final Rule The Bureau issued the Patch One category of QMs defined by the provided that the Temporary GSE QM Extension Final Rule on October 20, ATR/QM Rule consists of General QMs. loan definition would expire with 2020. It was published in the Federal The January 2013 Final Rule provided respect to each GSE when that GSE Register on October 26, 2020.26 The that a loan was a General QM if: ceases to operate under conservatorship Patch Extension Final Rule amended • The loan does not have negative- or on January 10, 2021, whichever Regulation Z to replace the January 10, amortization, interest-only, or balloon- occurred first.20 As discussed further 2021 sunset date of the Temporary GSE payment features, a term that exceeds 30 below in part II.C.1, the Bureau issued QM loan definition with a provision years, or points and fees that exceed a final rule in October 2020 extending stating that the Temporary GSE QM loan specified limits; 13 the expiration of the Temporary GSE definition will be available only for • The creditor underwrites the loan QM loan definition.21 covered transactions for which the based on a fully amortizing schedule creditor receives the consumer’s B. The Bureau’s Assessment of the ATR/ application before the mandatory 9 15 U.S.C. 1639c(b)(2)(A). QM Rule, Requests for Information, and compliance date of final amendments to 10 78 FR 6408 (Jan. 30, 2013). the ANPR the General QM loan definition in 11 As discussed in part II.C below, the Bureau Section 1022(d) of the Dodd-Frank made several amendments to the ATR/QM Rule in Regulation Z. The Patch Extension Final 2020. Prior to 2020, the Bureau made several other Act requires the Bureau to assess each Rule did not amend the clause amendments to the ATR/QM Rule. See 78 FR 35429 of its significant rules and orders and to (June 12, 2013); 78 FR 44686 (July 24, 2013); 78 FR publish a report of each assessment 22 12 U.S.C. 5512(d). 60382 (Oct. 1, 2013); 79 FR 65300 (Nov. 3, 2014); within five years of the effective date of 23 See generally Bureau of Consumer Fin. Prot., 80 FR 59944 (Oct. 2, 2015); 81 FR 16074 (Mar. 25, Ability to Repay and Qualified Mortgage 2016); 85 FR 67938 (Oct. 26, 2020). Assessment Report (Jan. 2019), https:// 12 14 12 CFR 1026.43(c), (e). The ATR/QM Rule 12 CFR 1026.43(e)(2)(iv). files.consumerfinance.gov/f/documents/cfpb_ 15 created several additional categories of QMs. The 12 CFR 1026.43(e)(2)(v), as was in effect on ability-to-repay-qualified-mortgage_assessment- first additional category consisted of mortgages February 26, 2021. report.pdf (Assessment Report). eligible to be insured or guaranteed (as applicable) 16 12 CFR 1026.43(e)(2)(vi), as was in effect on 24 See, e.g., 82 FR 25246 (June 1, 2017) (request by HUD (FHA loans), the U.S. Department of February 26, 2021. for information in connection with the Bureau’s Veterans Affairs (VA loans), the U.S. Department of 17 78 FR 6408, 6527–28 (Jan. 30, 2013) (noting Agriculture (USDA loans), and the Rural Housing assessment of the ATR/QM Rule); 83 FR 10437 that appendix Q incorporates, with certain (Mar. 9, 2018) (request for information on the Service (RHS loans). 12 CFR 1026.43(e)(4)(ii)(B) modifications, the definitions and standards in through (E), as was in effect on February 26, 2021. Bureau’s rulemaking process); 83 FR 12286 (Mar. HUD Handbook 4155.1, Mortgage Credit Analysis 21, 2018) (request for information on the Bureau’s This temporary category of QMs no longer exists for Mortgage Insurance on One-to-Four-Unit because the relevant Federal agencies have since adopted regulations and new rulemaking Mortgage Loans). authorities); 83 FR 10437 (Mar. 9, 2018) (request for issued their own QM rules. See, e.g., 24 CFR 203.19 18 (HUD rule). Other categories of QMs provide more 12 CFR 1026.43(e)(2)(i) through (iii). information on the Bureau’s inherited regulations flexible standards for certain loans originated by 19 12 CFR 1026.43(e)(4), as was in effect on and inherited rulemaking authorities). In response certain small creditors. 12 CFR 1026.43(e)(5), (f); cf. February 26, 2021. to these requests for information, the Bureau 12 CFR 1026.43(e)(6) (applicable only to covered 20 12 CFR 1026.43(e)(4)(ii)(A) and received comments on the ATR/QM Rule from a transactions for which the application was received 1026.43(e)(4)(iii)(B), as was in effect on February wide variety of stakeholders. before Apr. 1, 2016). 26, 2021. 25 84 FR 37155, 37160–62 (July 31, 2019). 13 12 CFR 1026.43(e)(2)(i) through (iii). 21 85 FR 67938 (Oct. 26, 2020). 26 85 FR 67938 (Oct. 26, 2020).

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providing that the Temporary GSE QM creditors may also originate Temporary reconsider other aspects of the General loan definition expires on the date the GSE QM loans. QM Final Rule. applicable GSE exits Federal 3. The Seasoned QM Final Rule D. The Effects of the COVID–19 conservatorship. Therefore, under the Pandemic on the Mortgage Markets Patch Extension Final Rule, the The Bureau issued the Seasoned QM Temporary GSE QM loan definition will Final Rule on December 10, 2020. It was The General QM Final Rule expire upon the earlier of the mandatory published in the Federal Register on acknowledged that the COVID–19 compliance date of the final December 29, 2020.29 The Seasoned QM pandemic has had a significant effect on amendments to the General QM loan Final Rule created a new category of the U.S. economy. In the early months definition or the date the applicable QMs for first-lien, fixed-rate covered of the pandemic, economic activity GSE exits Federal conservatorship. transactions that have met certain contracted, millions of workers became performance requirements over a unemployed, and mortgage markets 2. The General QM Final Rule seasoning period of at least 36 months, were affected. Although the The Bureau issued the General QM are held in portfolio by the originating unemployment rate has declined from a Final Rule on December 10, 2020. It was creditor or first purchaser until the end high of 14.8 percent in April 2020 to 6.3 33 published in the Federal Register on of the seasoning period, comply with percent in January 2021, December 29, 2020.27 The General QM general restrictions on product features unemployment remains elevated Final Rule amended Regulation Z to and points and fees, and meet certain relative to the pre-pandemic rate of 3.5 30 remove the General QM loan underwriting requirements. The percent in February 2020, and the labor definition’s DTI limit (and appendix Q) Seasoned QM Final Rule took effect on force participation rate remains below and replace it with a limit based on the March 1, 2021. Under the Seasoned QM pre-pandemic levels, at 61.4 percent in loan’s pricing. Under the General QM Final Rule, the revised regulations apply January 2021 versus 63.3 percent in Final Rule, a loan meets the General QM to covered transactions for which February 2020. The housing market has loan definition only if the annual creditors receive an application on or seen a significant rebound in mortgage- origination activity, buoyed by percentage rate (APR) exceeds the after this effective date. Thus, due to the historically low interest rates and by an average prime offer rate (APOR) for a seasoning period, no loan will be increasingly large share of government comparable transaction by less than 2.25 eligible to become a Seasoned QM until and GSE-backed loans. However, the percentage points as of the date the at least 36 months after March 1, 2021. share of origination activity outside the interest rate is set. The final rule 4. February 2021 Statement Regarding government and GSE-backed origination provided higher thresholds for loans General QM and Seasoned QM Final channels has declined from pre- with smaller loan amounts, for certain Rules pandemic levels, and mortgage-credit manufactured housing loans, and for On February 23, 2021, the Bureau availability for many consumers— subordinate-lien transactions. The final issued a Statement on Mandatory including those who would be rule also requires that the creditor Compliance Date of General QM Final dependent on the non-QM market for consider the consumer’s DTI ratio or Rule and Possible Reconsideration of financing—remains tight. The residual income, income or assets other General QM Final Rule and Seasoned pandemic’s impact on both the than the value of the dwelling QM Final Rule (Statement).31 The secondary market for new originations (including any real property attached to Statement was published in the Federal and on the servicing of existing the dwelling) securing the loan, and Register on February 26, 2021.32 The mortgages is described below. debts and verify the consumer’s income Statement indicated that the Bureau is or assets other than the value of the 1. Secondary Market Impacts and considering whether to initiate a property securing the transaction and Implications for Mortgage Origination rulemaking to revisit the Seasoned QM debts. The final rule also provides a safe Markets Final Rule. It also noted that if the harbor for compliance with the Bureau decides to do so, it expects that The early economic disruptions verification requirement if a creditor it will consider in that rulemaking associated with the COVID–19 complies with verification standards in whether any potential final rule pandemic restricted the flow of credit in certain manuals listed in the rule.28 revoking or amending the Seasoned QM the U.S. economy, particularly as The General QM Final Rule had an Final Rule should affect covered uncertainty rose in mid-March 2020, effective date of March 1, 2021 but transactions for which an application and investors moved rapidly towards provided a mandatory compliance date was received during the period from cash and government securities.34 The of July 1, 2021. Therefore, for covered March 1, 2021, until the effective date lack of investor demand to purchase transactions for which creditors receive of such a final rule. The Statement also mortgages, combined with a large an application on or after March 1, 2021 indicated that the Bureau expected to supply of agency mortgage-backed and before July 1, 2021, creditors have issue shortly a proposed rule that would the option of complying with either the delay the July 1, 2021 mandatory 33 News Release, Bureau of Labor Statistics, U.S. revised General QM loan definition or compliance date of the General QM Dep’t of Labor, USDL–21–0158, The Employment the General QM loan definition in effect Situation (Feb. 5, 2021), https://www.bls.gov/charts/ Final Rule and that the Bureau will employment-situation/civilian-unemployment- prior to March 1, 2021. Under the Patch consider at a later date whether to rate.htm, and https://www.bls.gov/charts/ Extension Final Rule, described above, initiate another rulemaking to employment-situation/civilian-labor-force- the Temporary GSE QM loan definition participation-rate.htm (charts related to the Feb. 5, 2021 The Employment Situation news release). will expire on the mandatory 29 85 FR 86402 (Dec. 29, 2020). 34 The Coronavirus Aid, Relief, and Economic compliance date of the General QM 30 Id. Security Act, CARES Act: Hearing on The Quarterly amendments. Therefore, for covered 31 Bureau of Consumer Fin. Prot., Statement on CARES Act Report to Congress Before the S. Comm. transactions for which creditors receive Mandatory Compliance Date of General QM Final on Banking, Hous., & Urban Affairs, 116th Cong. 2– an application before July 1, 2021, Rule and Possible Reconsideration of General QM 3 (2020) (statement of Jerome H. Powell, Chairman, Final Rule and Seasoned QM Final Rule (Feb. 23, Bd. of Governors of the Fed. Reserve Sys.), https:// 2021), https://www.consumerfinance.gov/ www.banking.senate.gov/imo/media/doc/ 27 85 FR 86308 (Dec. 29, 2020). documents/9505/cfpb_qm-statement_2021-02.pdf. Powell%20Testimony%205-19-20.pdf (CARES Act 28 See comment 43(e)(2)(v)(B)–3.i. 32 86 FR 11623 (Feb. 26, 2021). Hearing).

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securities (MBS) entering the market,35 Because non-agency MBS 39 are typically specialized in non-QM resulted in widening spreads between generally perceived by investors as financing have shifted their focus to the rates on a 10-year Treasury note and riskier than agency MBS, the market for GSE originations due to historically low mortgage interest rates.36 This dynamic non-agency and non-QM mortgage interest rates and the relative speed and made it difficult for creditors to credit significantly contracted in the ease with which GSE loans can be originate loans, as many creditors rely early months of the pandemic. Issuance originated. Nonetheless, many non-QM on the ability to profitably sell loans in of non-agency MBS declined by 8.2 creditors and investors expect the non- the secondary market to generate the percent in the first quarter of 2020, with QM market 43 to continue to strengthen liquidity to originate new loans. This nearly all the transactions completed in in 2021 and recover to its pre-pandemic January and February before the resulted in mortgages becoming more levels of production.44 expensive for both homebuyers and COVID–19 pandemic began to affect the homeowners looking to refinance. After economy significantly.40 Nearly all As illustrated in Figure 1, the GSEs the actions taken by the Board of major non-QM creditors ceased making continue to play a dominant role in the Governors of the Federal Reserve loans in March and April 2020. The market recovery, with the GSE share of System (Board) in March 2020 to non-QM market has since been first-lien mortgage originations at 61.9 purchase agency MBS ‘‘in the amounts recovering, with strong investor demand percent in the third quarter of 2020, up needed to support smooth market for non-QM MBS due to better-than- from 45.3 percent in the third quarter of functioning and effective transmission expected performance during the 2019. One analysis found that the FHA of monetary policy to broader financial pandemic.41 Many non-QM creditors— and U.S. Department of Veterans Affairs conditions and the economy,’’ 37 market which largely depend on the ability to (VA) share declined slightly to 17.4 conditions improved substantially.38 sell loans in the secondary market in percent from 19.5 percent a year prior.45 This helped to stabilize the MBS market order to fund new loans—have resumed and resulted in a decline in mortgage originations, although some continue to maintain tighter underwriting 2020), https://www.insidemortgagefinance.com/ rates and a significant increase in articles/219861-expanded-credit-lending-ticks-up- refinance activity since the Board’s requirements compared to prior to the in-3q-amid-slow-recovery (on file). 42 intervention. pandemic. Other creditors that have 43 Refers to the non-QM market as defined by the January 2013 Final Rule. With the effective date of 39 Non-agency MBS are not backed by loans 35 Agency MBS are backed by loans guaranteed by the price-based approach in the revised General QM guaranteed by Fannie Mae, Freddie Mac, or Ginnie loan definition, many of these loans historically Fannie Mae, Freddie Mac, and the Government Mae. This includes securities collateralized by non- considered non-QM may qualify for QM status after National Mortgage Association (Ginnie Mae). QM loans. 36 March 1, 2021. Laurie Goodman et al., Urban Inst., Housing 40 Brandon Ivey, Non-Agency MBS Issuance Finance at a Glance, Monthly Chartbook (Mar. 26, Slowed in First Quarter, Inside Mortg. Fin. (Apr. 3, 44 Brandon Ivey, Outlook on Non-Agency MBS 2020), https://www.urban.org/sites/default/files/ 2020), https://www.insidemortgagefinance.com/ Issuance: Bright and Gloomy, Inside Mortg. Fin. publication/101926/housing-finance-at-a-glance-a- articles/217623-non-agency-mbs-issuance-slowed- (Jan. 15, 2021), https:// monthly-chartbook-march-2020.pdf (Housing in-first-quarter (on file). www.insidemortgagefinance.com/articles/220261- Finance at a Glance) (on file). 41 Bandon Ivey, Non-QM MBS Issuers Ready. But mixed-views-on-the-outlook-for-non-agency-mbs- 37 Press Release, Bd. of Governors of the Fed. Where Are the Loans?, Inside Mortg. Fin. (Jan. 29, issuance-in-2021 (on file). Reserve Sys., Federal Reserve announces extensive 2021), https://www.insidemortgagefinance.com/ 45 Laurie Goodman et al., Urban Inst., Housing new measures to support the economy (Mar. 23, articles/220373-non-qm-originations-and-mbs- Finance at a Glance, Monthly Chartbook (Jan, 2020), https://www.federalreserve.gov/newsevents/ ready-to-rebound-after-the-refi-boom (on file). 2021), https://www.urban.org/sites/default/files/ pressreleases/monetary20200323b.htm. 42 Brandon Ivey, Expanded-Credit Lending Inches 38 CARES Act Hearing, supra note 34, at 3. Up in Third Quarter, Inside Mortg. Fin. (Nov. 25, publication/103539/housing-finance-at-a-glance-a- monthly-chartbook-january-2021_1.pdf (Housing Finance at a Glance) (on file).

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Portfolio lending declined to 19.6 down from 33.3 percent in the third securitizations declined to 1 percent percent in the third quarter of 2020, quarter of 2019, and private label from 1.8 percent a year prior.

2. Servicing Market Impacts and option to extend the forbearance period agencies also announced an extension Implications for Origination Markets for an additional 180 days. in the forbearance enrollment window FHFA recently announced that until June 30, 2021, to provide In addition to the direct impact on borrowers with a mortgage backed by additional time for borrowers to request origination volume and composition, the GSEs may be eligible for two a COVID–19 forbearance. FHFA has not the pandemic’s impact on the mortgage additional three-month forbearance yet announced a deadline for borrowers servicing market has downstream effects extensions, for a total of up to 18 with mortgages backed by the GSEs to on mortgage originations as many of the months of forbearance, for certain enroll in a COVID–19 forbearance plan. same entities both originate and service borrowers who began a COVID–19 Following the passage of the CARES mortgages. Anticipating that a number forbearance on or before February 28, Act, some mortgage servicers remain of homeowners would struggle to pay 2021. On February 16, 2021, FHA, VA, obligated to make some principal and their mortgages due to the pandemic and USDA also provided up to six interest payments to investors in GSE and related economic impacts, Congress months of additional mortgage and Ginnie Mae securities, even if passed and the President signed into forbearance, in three-month increments, consumers are not making payments.48 law the Coronavirus Aid, Relief, and for borrowers who entered forbearance Economic Security Act (CARES Act) 46 on or before June 30, 2020. FHA, VA, Period and Foreclosure and REO Eviction Moratoriums (Feb. 25, 2021), https://www.fhfa.gov/ in March 2020. The CARES Act and USDA also extended the foreclosure moratorium on government-insured and Media/PublicAffairs/Pages/FHFA-Extends-COVID- provides certain protections for 19-Forbearance-Period-and-Foreclosure-and-REO- guaranteed loans until June 30, 2021, borrowers with federally backed Eviction-Moratoriums.aspx. from the previous expiration date of 48 mortgages, such as those whose The GSEs typically repurchase loans out of the March 31, 2021, and the GSEs trust after they fall 120 days delinquent, after which mortgages are purchased or securitized announced a similar extension on the servicer is no longer required to advance principal and interest, but Ginnie Mae requires by a GSE or insured or guaranteed by February 25, 2021.47 The government the FHA, VA, or U.S. Department of servicers to advance principal and interest until the default is resolved. On April 21, 2020, the FHFA Agriculture (USDA). The CARES Act 47 Press Release, The White House, Fact Sheet: confirmed that servicers of GSE loans will only be mandated a 60-day foreclosure Biden Administration Announces Extension of required to advance four months of mortgage moratorium for such mortgages and COVID–19 Forbearance and Foreclosure Protections payments, regardless of whether the GSEs for Homeowners (Feb. 16, 2021), https:// repurchase the loans from the trust after 120 days allowed borrowers to request up to 180 www.whitehouse.gov/briefing-room/statements- of delinquency. Fed. Hous. Fin. Agency, FHFA days of forbearance due to a COVID–19- releases/2021/02/16/fact-sheet-biden- Addresses Servicer Liquidity Concerns, Announces related financial hardship, with an administration-announces-extension-of-covid-19- Four Month Advance Obligation Limit for Loans in forbearance-and-foreclosure-protections-for- Forbearance (Apr. 21, 2020), https://www.fhfa.gov/ homeowners/. See also Press Release, Fed. Hous. Media/PublicAffairs/Pages/FHFA-Addresses- 46 Public Law 116–136, 134 Stat. 281 (2020). Fin. Agency, FHFA Extends COVID–19 Forbearance Servicer-Liquidity-Concerns-Announces-Four-

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Servicers also remain obligated to make pandemic there were significant rates remain elevated at 5.22 percent for escrowed real estate tax and insurance concerns that higher-than-expected the week ending February 14, 2021, they payments to local taxing authorities and forbearance rates over an extended have decreased since reaching their high insurance companies. While servicers period of time could lead to liquidity of 8.55 percent on June 7, 2020.49 are required to hold liquid reserves to shortages, particularly among many However, the rate of decline has begun cover anticipated advances, early in the non-bank servicers. While forbearance to slow, as illustrated in Figure 2 below.

Because many mortgage servicers also due to refinance origination profits III. Legal Authority originate the loans they service, many resulting from historically low interest creditors, as well as several warehouse rates, the leveling off in forbearance The Bureau is proposing to amend providers,50 initially responded to the rates, and actions taken at the Federal Regulation Z pursuant to its authority risk of elevated forbearances and higher- level to alleviate servicer liquidity under TILA and the Dodd-Frank Act. than-expected monthly advances by pressure,53 concerns over non-bank Section 1061 of the Dodd-Frank Act imposing credit overlays—i.e., liquidity, and related credit overlays transferred to the Bureau the ‘‘consumer additional underwriting standards—for have eased, although Federal regulators financial protection functions’’ new originations. These new continue to monitor the situation.54 previously vested in certain other underwriting standards included more Nonetheless, access to credit for higher- Federal agencies, including the Board. stringent requirements for non-QM, risk but creditworthy consumers The Dodd-Frank Act defines the term jumbo, and government loans.51 An remains an ongoing concern given ‘‘consumer financial protection ‘‘adverse market fee’’ of 50 basis points function’’ to include ‘‘all authority to on most refinances became effective for continued uncertainty over the impact of the expiration of foreclosure prescribe rules or issue orders or new originations delivered to the GSEs guidelines pursuant to any Federal on or after December 1, 2020, to cover moratoriums and COVID–19 forbearance plans on the mortgage market as well as consumer financial law, including projected losses due to forbearances, the performing appropriate functions to foreclosure moratoriums, and other lender capacity constraints due to strong promulgate and review such rules, default servicing expenses.52 However, refinance demand.

Month-Advance-Obligation-Limit-for-Loans-in- 52 Press Release, Fed. Hous. Fin. Agency, Adverse www.ginniemae.gov/issuers/program_guidelines/ Forbearance.aspx. Market Refinance Fee Implementation now Pages/mbsguideapmslibdisppage.aspx? 49 Press Release, Mortg. Bankers Ass’n, Share of December 1 (Aug. 25, 2020), https://www.fhfa.gov/ ParamID=105. On April 7, 2020, Ginnie Mae also Mortgage Loans in Forbearance Declines to 5.22% Media/PublicAffairs/Pages/Adverse-Market- announced approval of a servicing advance (Feb. 22, 2021), https://www.mba.org/2021-press- Refinance-Fee-Implementation-Now-December- financing facility, whereby mortgage servicing releases/february/share-of-mortgage-loans-in- 1.aspx. rights are securitized and sold to private investors. forbearance-declines-to-522-percent. 53 On April 10, 2020, Ginnie Mae released Press Release, Ginnie Mae, Ginnie Mae approves 50 Warehouse providers are creditors that provide guidance on a Pass-Through Assistance Program private market servicerliquidity facility (Apr. 7, financing to mortgage originators and servicers to whereby Ginnie Mae will provide financial 2020), https://www.ginniemae.gov/newsroom/ fund and service loans. assistance at a fixed interest rate to servicers facing Pages/PressReleaseDispPage.aspx?ParamID=194. 51 Maria Volkova, FHA/VA Lenders Raise Credit a principal and interest shortfall as a last resort. Score Requirements, Inside Mortg. Fin. (Apr. 3, Ginnie Mae, All Participant Memorandum (APM) 54 Fin. Stability Oversight Council, U.S. Dep’t of 2020), https://www.insidemortgagefinance.com/ 20–03: Availability of Pass-Through Assistance the Treasury, 2020 Annual Report, at 169, https:// articles/217636-fhava-lenders-raise-fico-credit- Program for Participants in Ginnie Mae’s Single- home.treasury.gov/system/files/261/FSOC2020 score-requirements (on file). Family MBS Program (Apr. 10, 2020), https:// AnnualReport.pdf.

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orders, and guidelines.’’ 55 Title X of the revise, add to, or subtract from the General QM Final Rule or the date the Dodd-Frank Act (including section criteria that define a QM upon a finding applicable GSE ceases to operate under 1061), along with TILA and certain that such regulations are necessary or conservatorship, whichever comes first. subtitles and provisions of title XIV of proper to ensure that responsible, Therefore, creditors seeking to originate the Dodd-Frank Act, are Federal affordable mortgage credit remains QMs have the additional option of consumer financial laws.56 available to consumers in a manner complying with the Temporary GSE QM consistent with the purposes of TILA loan definition, if the application for the A. TILA section 129C; or are necessary and covered transaction was received before TILA section 105(a). Section 105(a) of appropriate to effectuate the purposes of either July 1, 2021 or the date the TILA directs the Bureau to prescribe TILA sections 129B and 129C, to applicable GSE ceases to operate under regulations to carry out the purposes of prevent circumvention or evasion conservatorship, whichever comes first. TILA and states that such regulations thereof, or to facilitate compliance with The Bureau is proposing to delay the may contain such additional such sections.61 In addition, TILA mandatory compliance date of the requirements, classifications, section 129C(b)(3)(A) directs the Bureau General QM Final Rule until October 1, differentiations, or other provisions and to prescribe regulations to carry out the 2022. Specifically, the proposal would may further provide for such purposes of section 129C.62 The Bureau amend comment 43–2 to extend the adjustments and exceptions for all or is proposing to issue this proposed rule mandatory compliance date of the any class of transactions that the Bureau pursuant to its authority under TILA General QM Final Rule by changing July judges are necessary or proper to section 129C(b)(3)(B)(i). 1, 2021, where it appears in that effectuate the purposes of TILA, to comment, to October 1, 2022. As prevent circumvention or evasion B. Dodd-Frank Act discussed below in the section-by- thereof, or to facilitate compliance Dodd-Frank Act section 1022(b). section analysis of § 1026.43(e)(2), the therewith.57 A purpose of TILA is ‘‘to Section 1022(b)(1) of the Dodd-Frank Bureau is also proposing to add assure a meaningful disclosure of credit Act authorizes the Bureau to prescribe comment 43(e)(2)-1 to clarify that both terms so that the consumer will be able rules to enable the Bureau to administer the General QM loan definition that was to compare more readily the various and carry out the purposes and in effect prior to the effective date of the credit terms available to him and avoid objectives of the Federal consumer General QM Final Rule and the General the uninformed use of credit.’’ 58 financial laws, and to prevent evasions QM loan definition as amended by the Additionally, a purpose of TILA thereof.63 TILA and title X of the Dodd- General QM Final Rule are available to sections 129B and 129C is to assure that Frank Act are Federal consumer creditors for transactions for which a consumers are offered and receive financial laws. Accordingly, the Bureau creditor received an application on or residential mortgage loans on terms that is proposing to exercise its authority after March 1, 2021 but prior to October reasonably reflect their ability to repay under Dodd-Frank Act section 1022(b) 1, 2022. Finally, as discussed below in the loans and that are understandable to prescribe rules that carry out the the section-by-section analysis of and not unfair, deceptive, or abusive.59 purposes and objectives of TILA and § 1026.43(e)(4), the Bureau is proposing The Bureau is proposing to issue this title X and prevent evasion of those to change July 1, 2021, where it appears proposed rule pursuant to its laws. in the commentary to § 1026.43(e)(4), to rulemaking, adjustment, and exception IV. Section-by-Section Analysis October 1, 2022. authority under TILA section 105(a). This proposal would extend by 15 TILA section 129C(b)(2)(A). TILA 1026.43 Minimum Standards for months—from July 1, 2021 to October 1, section 129C(b)(2)(A)(vi) provides the Transactions Secured by a Dwelling 2022—the period during which the Bureau with authority to establish The General QM Final Rule revised General QM loan definition, the guidelines or regulations relating to established a March 1, 2021 effective General QM loan definition that was in ratios of total monthly debt to monthly date and a July 1, 2021 mandatory effect prior to March 1, 2021, and the income or alternative measures of compliance date. Comment 43–2 Temporary GSE QM loan definition all ability to pay regular expenses after explains that, for transactions for which would be available to creditors. payment of total monthly debt, taking a creditor received the consumer’s Specifically, for transactions for which into account the income levels of the application on or after March 1, 2021, a creditor received the consumer’s borrower and such other factors as the and prior to July 1, 2021, creditors application on or after March 1, 2021 Bureau may determine relevant and seeking to originate General QMs have and prior to October 1, 2022, creditors consistent with the purposes described seeking to originate General QMs would 60 the option of complying with either the in TILA section 129C(b)(3)(B)(i). The revised General QM loan definition or have the option of complying with Bureau is proposing to issue this the version of the General QM loan either the revised General QM loan proposed rule pursuant to its authority definition that was in effect prior to definition or the version of the General under TILA section 129C(b)(2)(A)(vi). March 1, 2021. This comment also QM loan definition that was in effect TILA section 129C(b)(3)(A), (B)(i). explains that, for transactions for which prior to March 1, 2021. For transactions TILA section 129C(b)(3)(B)(i) authorizes a creditor received the consumer’s for which a creditor received the the Bureau to prescribe regulations that application on or after July 1, 2021, consumer’s application on or after October 1, 2022, creditors seeking to 55 creditors seeking to originate General 12 U.S.C. 5581(a)(1)(A). QMs must use the revised General QM originate General QMs would have to 56 Dodd-Frank Act section 1002(14), 12 U.S.C. use the revised General QM loan 5481(14) (defining ‘‘Federal consumer financial loan definition. law’’ to include the ‘‘enumerated consumer laws’’ Additionally, under the Patch definition. Additionally—because the and the provisions of title X of the Dodd-Frank Act), Extension Final Rule, the Temporary Temporary GSE QM loan definition Dodd-Frank Act section 1002(12)(O), 12 U.S.C. GSE QM loan definition expires on the expires on the mandatory compliance 5481(12)(O) (defining ‘‘enumerated consumer laws’’ date of the General QM Final Rule or the to include TILA). mandatory compliance date of the 57 15 U.S.C. 1604(a). date the applicable GSE ceases to 58 15 U.S.C. 1601(a). 61 15 U.S.C. 1639c(b)(3)(B)(i). operate under conservatorship— 59 15 U.S.C. 1639b(a)(2). 62 15 U.S.C. 1639c(b)(3)(A). creditors seeking to originate QMs 60 15 U.S.C. 1639c(b)(2)(A). 63 12 U.S.C. 5512(b)(1). would have the additional option of

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complying with the Temporary GSE QM difficult for creditors to adapt to the pandemic, the Bureau stated that loan definition, if the application for the new definition. A few of these conditions in the mortgage market did covered transaction was received before commenters stated that an overlap not justify extending the Temporary either October 1, 2022 or the date the period, during which creditors could GSE QM loan definition past the date applicable GSE ceases to operate under continue to make QMs under the creditors would be required to transition conservatorship, whichever comes first. Temporary GSE QM loan definition from the then-current General QM loan after the date creditors would be Reasons the General QM Final Rule definition to the revised definition, required to transition to the revised Adopted the July 1, 2021 Mandatory particularly in light of the General QM loan definition, would Compliance Date aforementioned concerns the Bureau reduce the potential that a revised stated about the negative effects of the The General QM Final Rule adopted General QM loan definition could Temporary GSE QM loan definition on a mandatory compliance date of July 1, disrupt the mortgage market and affect the mortgage market.71 2021 because the Bureau concluded that credit access due to unforeseen changes this date would give creditors and the in the economy or the mortgage market In the General QM Final Rule, several secondary market sufficient time— due to the pandemic.68 industry commenters requested a longer approximately six months from the date The Bureau declined to adopt an implementation period than the six- the Bureau expected that final rule to be overlap period in the Patch Extension month period the Bureau proposed. published in the Federal Register—to Final Rule. The Bureau concluded that Some of these commenters stated that prepare to comply with the General QM establishing an overlap period that the implementation period should Final Rule’s amendments to the ATR/ extends past the date creditors are account for other simultaneous QM Rule.64 The General QM Final Rule required to transition from the then- challenges for creditors, including noted that the COVID–19 pandemic had current General QM loan definition to responding to the COVID–19 pandemic significantly disrupted the mortgage the revised General QM loan definition and its economic effects. The Bureau market.65 Nevertheless, the Bureau would keep the Temporary GSE QM concluded that a six-month finalized a July 1, 2021 mandatory loan definition in place longer than implementation period would give compliance date, taking into necessary to facilitate a smooth and creditors and secondary market consideration market conditions at the orderly transition to a revised General participants enough time to prepare to time and concerns about the perceived QM loan definition. The Bureau stated comply with the final rule, even in light negative effects of the Temporary GSE that it sought to maintain the Temporary of these challenges. The Bureau stated QM loan definition on the market. GSE QM loan definition only as long as that current market conditions did not Some commenters on the Patch necessary to facilitate a smooth and require a longer implementation Extension Proposal 66 and the General orderly transition to a revised General period.72 67 QM Proposal cited the pandemic in QM loan definition, and no longer, In addition, two commenters that requesting that the Bureau take different because the Bureau concluded that the submitted a joint comment letter on the approaches to extending the Temporary Temporary GSE QM loan definition has Patch Extension Proposal stated that the GSE QM loan definition and revising certain negative effects on the mortgage Temporary GSE QM loan definition the General QM loan definition than the market, including stifling innovation should remain in place until the Bureau Bureau had proposed. Several and the development of competitive assesses the impacts of the pandemic on commenters on the Patch Extension private-sector approaches to mortgage markets, including the decline Proposal asked the Bureau to extend the underwriting. The Bureau further of the non-QM market and creditors’ Temporary GSE QM loan definition to concluded that, as long as the increasing reliance on GSE and FHA expire several months after the date Temporary GSE QM loan definition loans.73 In their comments on the creditors would be required to transition continued to be in effect, the non-GSE General QM Proposal, some consumer from the old General QM loan definition private market was less likely to advocate commenters and an individual to the new definition. Among the rebound and that the existence of the commenter requested that the Bureau reasons cited for the request was that Temporary GSE QM loan definition may pause the General QM rulemaking in the pandemic was straining creditors’ have been limiting the development of light of the pandemic. The consumer resources and personnel, making it more the non-GSE private market. For these advocate commenters cited the turmoil reasons, the Bureau concluded that it and economic fallout from the 64 The Bureau stated that, with respect to the was appropriate for the Temporary GSE pandemic as a reason to pause the price-based thresholds in revised QM loan definition to remain in place § 1026.43(e)(2)(vi), the Bureau understood that rulemaking.74 creditors currently calculate the APR and APOR for no longer than the date creditors are mortgage loans. The Bureau also stated that the required to transition from the then- The Bureau declined to extend the revised consider requirements generally reflected current General QM loan definition to Temporary GSE QM loan definition existing market practices and that creditors the revised General QM loan indefinitely while the Bureau further currently used and were familiar with the 69 assessed the impact of the pandemic or verification standards that the General QM Final definition. (The Bureau also cited Rule adopted. The Bureau also concluded that the these negative effects in declining to to pause the General QM rulemaking in General QM Final Rule would be less complex to make the Temporary GSE QM loan light of the pandemic. However, in the implement relative to other rules the Bureau has definition permanent.) 70 With respect Patch Extension Final Rule, the Bureau issued, such as the January 2013 Final Rule or noted that, if market conditions were to TILA–RESPA Integrated Disclosure Rule. 85 FR to commenters’ concerns related to the 86308, 86385–86 (Dec. 29, 2020). change or other circumstances were to 65 Id. at 86313–15. 68 85 FR 67938, 67949 (Oct. 26, 2020). arise before the Bureau issued the 66 85 FR 41448 (July 10, 2020). The Patch 69 Id. at 67951. Several commenters on the General QM Final Rule, the Bureau Extension Proposal was the proposed rule that the General QM Proposal also requested that the Bureau could extend the Temporary GSE QM Bureau issued in connection with the Patch adopt an overlap period. The Bureau declined to Extension Final Rule. adopt an overlap period in the General QM Final 71 67 85 FR 41716 (July 10, 2020). The General QM Rule for the same reasons it declined to adopt an Id. at 67953. Proposal was the proposed rule that the Bureau overlap period in the Patch Extension Final Rule. 72 85 FR 86308, 86385 (Dec. 29, 2020). issued in connection with the General QM Final 85 FR 86308, 86385 (Dec. 29, 2020). 73 85 FR 67938, 67950 (Oct. 26, 2020). Rule. 70 85 FR 67938, 67953 n.141 (Oct. 26, 2020). 74 85 FR 86308, 86333 (Dec. 29, 2020).

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loan definition for a longer period of consumers by allowing creditors to foreclosure moratoriums may result in time.75 continue making QMs under the DTI- these effects continuing longer than the based General QM loan definition and Bureau anticipated at the time of the Reasons for the Proposed Extension of under the Temporary GSE QM loan General QM Final Rule. the Mandatory Compliance Date definition until October 1, 2022. The Bureau preliminarily concludes The Bureau is issuing this proposal The Bureau is concerned that that extending the mandatory because it has preliminarily concluded requiring creditors seeking to make QM compliance date of the General QM that maintaining the July 1, 2021 loans to shift to the price-based General Final Rule to October 1, 2022 will mandatory compliance date may leave QM loan definition and limiting their provide additional flexibility to some struggling homeowners with fewer ability to rely on the Temporary GSE creditors originating QM loans. options by reducing the flexibility of QM loan definition and on the DTI- Specifically, creditors would be creditors to respond to the effects of the based General QM loan definition on permitted to originate General QM loans pandemic. In the Patch Extension Final July 1, 2021 could reduce access to under the price-based General QM loan Rule and the General QM Final Rule, credit, particularly for certain consumer definition that took effect on March 1, the Bureau noted the disruptive effects segments. The Bureau has two separate 2021, and would also be allowed to of the pandemic on the mortgage market concerns related to access to originate General QM loans in but nevertheless concluded that these responsible, affordable mortgage credit, accordance with the DTI-based General effects did not justify delaying the as detailed further below. First, the QM loan definition that was in effect requirement to comply with the revised Bureau believes that ongoing regulatory prior to March 1, 2021, as well as General QM loan definition on July 1, interventions to assist consumers who Temporary GSE QM loans, for an 2021. Upon further evaluation, the may have suffered an income disruption additional 15 months. As discussed in Bureau is concerned that it may not related to the pandemic—such as further detail in this section, the Bureau have given sufficient weight to the COVID–19 forbearance plans and is issuing this proposal because potential risk that mandating the foreclosure moratoriums—and potential providing such flexibility may benefit transition to the price-based approach in disruptions in the market when those struggling consumers who are forced to the revised General QM loan definition interventions expire may warrant an sell their property to avoid foreclosure on July 1, 2021 could restrict options for extension of the mandatory compliance by helping to ensure that potential consumers struggling with the date. Second, the Bureau has concerns purchasers continue to have access to disruptive effects of the pandemic. The about mortgage credit availability for mortgage credit. The following section Bureau preliminarily concludes that some creditworthy consumers who (entitled Concerns regarding access to maximizing flexibility to respond to the would qualify for a mortgage but for the mortgage credit for consumers) effects of the pandemic, by delaying the disruptive market effects of the describes the Bureau’s concerns that mandatory compliance date until pandemic, and such concerns may despite record origination volume, October 1, 2022, outweighs concerns warrant an extension of the mandatory access to credit has remained relatively that an extension of the mandatory compliance date. tight for consumers with weaker credit. compliance date could stifle the Impact of foreclosure moratoriums Moreover, this proposal may also development of private-sector and the expiration of COVID–19 provide some consumers with approaches to underwriting or a forbearance plans. The Bureau is additional opportunities to refinance rebound of the non-GSE private market issuing this proposal because it is into historically low interest rates. in the near term. concerned that the impact of the The Bureau is concerned that the The Bureau also believes that the eventual expiration of foreclosure potential impact of the COVID–19 adverse impact of the pandemic on moratoriums and COVID–19 forbearance pandemic on the mortgage market may mortgage markets may persist longer plans described in part II.D above has continue for longer than anticipated at than anticipated at the time of the potential to lead to additional the time the Bureau issued the General publication of the General QM Final disruptions in the mortgage markets. In QM Final Rule, and so could warrant Rule. In particular, as discussed in more particular, the Bureau is concerned that additional flexibility in the QM market detail below, with the extension of such expirations may create the to ensure creditors are able to certain forbearance programs and potential for heightened delinquencies accommodate struggling consumers. foreclosure moratoriums, the Bureau and foreclosures for consumers who Specifically, as discussed in part II.D, believes that the potential for disruption continue to suffer disruptions in their the expiration dates for the foreclosure in the mortgage market will persist well income due to the COVID–19 pandemic. moratoriums and enrollment dates for past July 2021. The Bureau is concerned that, while the COVID–19 forbearance plans have The Bureau notes that this rulemaking many consumers currently in been extended for loans guaranteed or does not reconsider the merits of the forbearance plans can be assisted insured by the GSEs, FHA, VA, and price-based approach adopted in the through payment deferrals and loan USDA since the publication of the Patch General QM Final Rule. The revised modifications, there will be some Extension Final Rule and the General General QM loan definition went into consumers who will be unable to either QM Final Rule. Both the GSEs and the effect on March 1, 2021, and creditors resume their mortgage payment or government agencies have also have the option of using that definition sustain a modified loan payment and lengthened the permissible forbearance to originate QMs. Rather, this proposal will be forced to either sell their homes period from the 12 months mandated in addresses the narrower question of or be placed into foreclosure after the the CARES Act to up to 18 months for whether it would be appropriate in light expiration of the foreclosure certain loans. Under these revised of the continuing disruptive effects of moratoriums. The Bureau is concerned timelines, most COVID–19 forbearance the pandemic to help facilitate greater that it may not have given sufficient plans will expire no later than June 30, creditor flexibility and expanded weight to these issues in mandating that 2022. availability of responsible, affordable creditors comply with the price-based The Bureau is concerned that the credit options for some struggling approach on July 1, 2021. In addition, combined impact of the expiration of the Bureau believes that the extension of the foreclosure moratoriums and the 75 85 FR 67938, 67953 (Oct. 26, 2020). certain forbearance programs and expiration of the COVID–19 forbearance

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plans creates the potential for October 1, 2022, may assist some definition would not be eligible under heightened delinquencies and consumers who need to sell their homes the revised, price-based General QM foreclosures for consumers who by providing creditors additional loan definition. Maintaining the continue to suffer disruptions in their flexibility to continue originating new availability of all three QM definitions income due to the COVID–19 pandemic. QM loans under the Temporary GSE until October 1, 2022 would maximize While many consumers currently in QM loan definition and under the DTI- refinance options for consumers who forbearance plans can be assisted based General QM loan definition, as have been struggling to make their through payment deferrals and loan well as under the price-based approach mortgage payments or who under more modifications, there will be some in the revised General QM loan ordinary circumstances likely have the consumers who will be unable to definition. Consumers who need to sell ability to repay their loans but who may sustain a modified loan payment and their homes may benefit from a broader be underwater on their mortgage as a will be forced to sell their homes to QM definition that encourages more result of the unique circumstances of avoid foreclosure. While rising house potential purchasers to enter the market the pandemic. prices have increased overall home and buy properties that might otherwise As discussed earlier and illustrated in equity, which will assist consumers go into foreclosure. Extending the Figure 1, the GSEs tend to play a who need to sell their homes upon the Temporary GSE QM loan definition may dominant role during economic expiration of their forbearance plan, also provide additional flexibility for downturns and recoveries, and more vulnerable consumers are likely to the GSEs to develop and modify additional origination flexibilities may have less equity in their homes than the potential pre-foreclosure sale prove helpful in the current market general population. One analysis products—such as short sale and deed- recovery by allowing consumers indicated that 10.4 percent of mortgage in-lieu of foreclosure programs—to additional opportunities to refinance consumers in forbearance have less than respond to a potential increase in into historically low interest rates. For 10 percent equity in their homes to pay distressed sales as necessary. example, during the 2008 financial for closing costs, and this share Under the revised timelines, most crisis, FHFA established the Home increases to 15.3 percent after taking COVID–19 forbearance plans will expire Affordable Refinance Program (HARP) into account 12 months of deferred no later than June 30, 2022, at which to help homeowners who were unable interest during the forbearance period.76 point the availability of the Temporary to refinance their loans due to a decline If consumers have deferred payments of GSE QM loan definition and the General in their home value. Approximately 3.5 taxes and insurance, their equity QM loan definition that was in effect million consumers benefited from position will have eroded even further. prior to March 1, 2021 could help HARP, and FHFA found that consumers Government loans, which tend to have alleviate adverse impacts on consumers who refinanced through HARP have had higher loan-to-value ratios (LTVs) and struggling to keep their homes upon lower delinquency rates compared with serve a higher-risk population, have a exiting their forbearance plan. consumers who were eligible for HARP median LTV at origination of 96.5 Extending the mandatory compliance but did not refinance through the percent as compared to 75 percent LTV date to October 1, 2022, as the Bureau program.81 When HARP expired in for mortgage borrowers overall.77 proposes, would make these additional 2018, FHFA replaced it with the High- Accordingly, nearly 20 percent of FHA QM definitions available for three LTV Refinance Programs. These and VA mortgages have less than 10 months after the latest date on which programs allow performing high-LTV percent equity, and the share increases most COVID–19 forbearance plans are (≤97 percent) borrowers to access rate- to 26 percent when taking into account set to expire. The Bureau preliminarily and-term refinances without providing deferred interest.78 While some research concludes that three months is a full income documentation. These suggests borrowers with government sufficient period of time for creditors to refinances may currently obtain QM loans have an average 22 percent equity use the additional QM flexibility to status through the Temporary GSE QM buffer given recent home price assist consumers whose COVID–19 loan definition. As discussed earlier, appreciation, certain borrower segments forbearance plans expire on June 30, while the Bureau does not expect and States and localities may remain at 2022 and whose incomes may not have widespread home price declines akin to 79 risk of heightened foreclosure activity. recovered enough to sustain their pre- the 2008 financial crisis, some segments While the foreclosures and distressed pandemic mortgage payment or a of consumers and localities could sales are expected to remain far below modified mortgage payment. benefit from the existing high-LTV The Bureau is also concerned that the levels experienced during the 2008 refinance programs. More generally, 80 allowing the Temporary GSE QM loan financial crisis, the Bureau extending the Temporary GSE QM loan definition to expire on July 1, 2021 preliminarily concludes that extending definition would also help ensure that would limit the ability of the GSEs to the mandatory compliance date until the ATR/QM Rule does not impair originate new loans and could restrict FHFA and the GSEs from exercising the 76 their flexibility to develop new Black Knight, Inc., Deferred Payments During flexibility to tailor existing programs to Forbearance Beginning To Erode Equity Positions refinance programs to address emerging meet future market changes specific to (Feb. 3, 2021) https://www.blackknightinc.com/ consumer needs during a period of blog-posts/deferred-payments-during-forbearance- heightened market uncertainty. In the the COVID–19 pandemic and the beginning-to-erode-equity-positions/ (Deferred regulatory interventions discussed Payments). General QM Final Rule, the Bureau earlier. The Bureau preliminarily 77 Ginnie Mae, Global Markets Analysis Report estimated that the price-based approach (Jan. 2021), https://www.ginniemae.gov/data_and_ concludes that it would be appropriate _ _ in the revised General QM loan reports/reporting/Documents/global market definition would preserve access to to provide such loans with the QM analysis_jan21.pdf. presumption of compliance with the 78 credit relative to the status quo with the Deferred Payments, supra note 76. ATR requirements under the Temporary 79 Urban Inst., The Predicted Foreclosure Surge DTI-based General QM loan definition Likely Won’t Happen, Even among Financially and the Temporary GSE QM loan GSE QM loan definition, given that such Vulnerable Borrowers (Feb. 11, 2021), https:// definition. Nevertheless, some loans www.urban.org/urban-wire/predicted-foreclosure- 81 Fed. Hous. Fin. Agency, Home Affordable surge-likely-wont-happen-even-among-financially- that would be QMs under the Refinance Program (HARP), https://www.fhfa.gov/ vulnerable-borrowers. Temporary GSE QM loan definition or PolicyProgramsReearch/Programs/Pages/ 80 Id. the DTI-based General QM loan HARP.aspx (last visited Feb. 23, 2021).

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programs would be implemented while As noted above, in the Patch definition even if the mandatory the GSEs are under the conservatorship Extension Final Rule and the General compliance period were delayed until of FHFA. QM Final Rule, the Bureau declined to October 1, 2022. Accordingly, the The Bureau preliminarily concludes extend the Temporary GSE QM loan Bureau preliminarily concludes that that extending the mandatory definition beyond the July 1, 2021 leaving the Temporary GSE QM loan compliance date of the General QM mandatory compliance date of the definition in place until October 1, 2022 Final Rule to October 1, 2022 will amendments to the General QM loan may be appropriate. benefit consumers by providing definition. The Bureau raised concerns Concerns regarding access to additional access to responsible, about potential harms from leaving the mortgage credit for consumers. The affordable mortgage credit and Temporary GSE QM loan definition in Bureau is also proposing to extend the flexibility for the GSEs to create and place longer than necessary, including mandatory compliance date of the modify programs to address emerging stifling innovation and the development General QM Final Rule to avoid a consumer needs. However, the Bureau of competitive private-sector approaches reduction in credit access for certain also recognizes that the anticipated to underwriting. The Bureau also stated consumers who have been unable to effects of this proposal may be affected that, as long as the Temporary GSE QM purchase or refinance due to the effects by policies, agreements, or legislation loan definition continued to be in effect, of the pandemic on the origination created by parties other than the Bureau. the non-GSE private market was less market. As described further below, the For example, the Preferred Stock likely to rebound and that the existence Bureau is concerned that despite the Purchase Agreements (PSPAs) for of the Temporary GSE QM loan record origination volumes, access to Fannie Mae and Freddie Mac or definition may have been limiting the low interest-rate refinances and restrictions of FHFA, as regulator and development of the non-GSE private purchase mortgages in these unique conservator of the GSEs, may restrict the market. For these reasons, the Bureau circumstances may be less widely GSEs from purchasing loans with concluded that it was appropriate for available for consumers with weaker certain attributes or characteristics.82 To the Temporary GSE QM loan definition credit relative to consumers with the extent that other factors prevent the to remain in place no longer than the stronger credit. The Bureau is concerned GSEs from using the additional date creditors are required to transition that requiring creditors to transition to flexibilities provided by the extension of from the then-current General QM loan the price-based General QM loan the mandatory compliance date and the definition to the revised General QM 83 definition on July 1, 2021 and Temporary GSE QM loan definition, the loan definition. The Bureau eliminating the Temporary GSE QM impacts of this proposed rule may be concluded that the mandatory loan definition and the DTI-based smaller than they otherwise would be. compliance date, and the expiration of General QM loan definition at that time Nonetheless, the Bureau is issuing this Temporary GSE QM loan definition could exacerbate these credit access proposal because it is concerned that should occur on July 1, 2021. However, concerns. the Bureau now preliminarily concludes mandating that creditors comply with As illustrated in Figure 3, first-lien that the need to provide maximum the revised General QM loan definition mortgage originations exceeded $4 flexibility to address the effects of the on July 1, 2021 could limit options for trillion in 2020, surpassing the prior pandemic outweighs any, likely minor, consumers struggling due to the record of $3.725 trillion set in 2003,84 inhibiting effect that extension of the disruptive effects of the pandemic, and and originators have faced significant because the Bureau is unable to predict Temporary GSE QM loan definition could have on new access to credit capacity and resource constraints given how such agreements or restrictions strong refinance demand. In addition, might change in the future. Accordingly, resulting from new private sector underwriting approaches or a rebound the Board has undertaken extraordinary the Bureau has preliminarily concluded interventions to purchase agency MBS that the benefits of continued access to of the non-GSE private market during the same period. Moreover, market in large quantities since March of 2020, credit for consumers during the which has exerted downward pressure pandemic warrant the additional participants looking to adopt innovative underwriting approaches or expand the on MBS yields and thus increased flexibility provided to creditors through liquidity for creditors who rely on the this proposed rule. non-GSE market would have the option to use the price-based General QM loan ability to sell GSE and government loans in the secondary markets.85 82 On January 14, 2021, the U.S. Department of the Treasury and the FHFA amended the terms of 83 85 FR 67938, 67951 (Oct. 26, 2020). Several the PSPAs for Fannie Mae and Freddie Mac. commenters on the General QM Proposal also 84 Inside Mortg. Fin., One for the Ages: Home Section 5.14(c) was added to the agreement and requested that the Bureau adopt an overlap period. Lenders Set New Production Record of $4T-Plus limits the GSEs’ acquisition of certain loans on or The Bureau declined to adopt an overlap period in (Jan. 27, 2021) https:// after July 1, 2021, including loans that are not the General QM Final Rule for the same reasons it www.insidemortgagefinance.com/articles/220379- qualified mortgages as defined by 12 CFR declined to adopt an overlap period in the Patch one-for-the-ages-home-lenders-set-new-production- 1026.43(e)(2), (5), (6), (7) or (f) with certain Extension Final Rule. 85 FR 86308, 86385 (Dec. 29, record-of-4t-plus (on file). exceptions. 2020). 85 Housing Finance at a Glance, supra note 36.

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The combination of mortgage take longer to close or have a lower MBS are beneficiaries of the Board’s origination capacity constraints and probability of closing to compensate for agency MBS purchases) are down increased liquidity in the agency MBS the fact that such loans reduce a slightly to 17.4 percent from 19.5 market has led creditors to focus on GSE creditor’s total expected origination percent a year prior.87 originations, which are quicker to close volume within a given time period. Even within the GSE and government and are generally considered less risky Overall, these short-run responses to the markets, some consumers may face than FHA-insured mortgages and loans pandemic-related capacity constraints reduced access to credit, as capacity originated in the private markets. In the could have the effect of temporarily constraints cause mortgage originators short-run, these pandemic-related pricing some creditworthy consumers to focus on consumers with the capacity constraints could cause the out of the market or delaying their strongest credit.88 Figure 4 illustrates supply of mortgage credit to fall short of ability to obtain a mortgage they potential differences in new credit demand from otherwise creditworthy otherwise could repay. originated for consumers with credit consumers who likely have the ability to Figure 2 illustrates the strong growth scores above and below a 700 credit repay. In response, creditors may of GSE lending in recent months, score in 2020.89 Year-over-year, impose credit overlays or, more showing GSE volume in the third mortgage balances for consumers with a commonly, increase pricing margins 86 quarter of 2020 was at 61.9 percent, up credit score of at least 700 have for certain products that are time- from 45.3 percent a year prior. By increased by 10 percent by the end of consuming to underwrite or for higher- contrast, portfolio lending declined 2020, while mortgage balances for risk consumers, including margin significantly to 19.6 percent in the third consumers with a credit score below increases beyond the risk-based pricing quarter of 2020, compared to 33.3 700 have decreased by nearly 2 percent. adjustments typically charged in a percent in the third quarter of 2019. In contrast, the auto financing sector has market without creditor capacity Private label securitizations declined to a far smaller disparity that also constraints. Creditors may raise prices 1 percent from 1.8 percent a year prior, remained more consistent throughout disproportionately for loans that either and even the FHA and VA share (whose the year.

86 Pricing margins refer to the difference between margin to compensate for the time and expense of www.nationalmortgagenews.com/opinion/the- the rate a creditor charges and the price at which underwriting. originations-feast-and-credit-availability-famine (on a creditor can sell the loan in the secondary market. 87 Id. file). In addition to risk-based pricing adjustments that 88 89 Moody’s Analytics Credit Forecast. are independent of any adjustments charged in the Nat’l Mortg. News, Opinion: The originations secondary market, a creditor may charge additional feast and credit famine (Oct. 4, 2020), https://

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As noted, the Bureau is concerned smaller QM market and potentially Bureau expects that creditors will use about the July 1, 2020 mandatory reduced access to credit in a market in comparable underwriting for loans compliance date of the General QM which creditors were limited to making within the DTI-based General QM loan Final Rule because requiring creditors to General QM loans under the revised, definition and the Temporary GSE QM transition to the price-based General price-based General QM loan definition. loan definition between July 1, 2021 and QM loan definition on July 1, 2021, and Extending the mandatory compliance October 1, 2022 as they did for loans eliminating the Temporary GSE QM date would retain flexibility for originated using those same definitions loan definition and the DTI-based creditors to originate loans as QMs prior to March 1, 2021. As a result, the General QM loan definition, could under the Temporary GSE QM loan Bureau expects QM loans originated exacerbate these pandemic-related definition and revised General QM loan between July 1, 2021 and October 1, concerns about access to credit for some definition for a longer period of time. 2022, using the General QM loan consumers. In the General QM Final Given the mortgage origination capacity definition that was in effect prior to Rule, the Bureau stated that maintaining concerns and the concentration of loans March 1, 2021 and the Temporary GSE access to responsible, affordable in the GSE channel described above, the QM loan definition, will have mortgage credit after the expiration of Bureau preliminarily concludes it is comparable risk levels to QM loans the Temporary GSE QM loan definition appropriate to extend the mandatory originated under those same definitions was a critical policy goal, and the compliance date of the General QM prior to March 1, 2021. Bureau found that the price-based Final Rule to October 1, 2022 to ensure Moreover, given the above-noted approach would further this goal.90 The broad credit access under the particular concerns about access to credit for Bureau concluded that the General QM circumstances arising from the COVID– certain consumers in the existing Final Rule’s pricing thresholds best 19 pandemic, including for loans in the market, the Bureau has concerns about balanced consumers’ ability to repay GSE channel. requiring creditors to transition to the with ensuring access to responsible, In addition, the Bureau preliminarily price-based approach in the General QM affordable mortgage credit, including for concludes that retaining a broad QM loan definition on July 1, 2021. In part minority consumers.91 However, market until October 1, 2022, in which V.B.5 of the General QM Final Rule,92 compared to a market in which creditors creditors could make QMs under the the Bureau acknowledged that overall could originate QM loans under the price-based approach in the revised market spreads may expand and tighten price-based approach in the revised General QM loan definition, the DTI- over time. The Bureau noted that it General QM loan definition, the DTI- based General QM loan definition, or monitors changing market and based General QM loan definition, or the Temporary GSE QM loan definition, economic conditions, and it could under the Temporary GSE QM loan would not significantly increase the consider changes to the pricing definition, there would be a slightly likelihood that risky loans would thresholds if circumstances warrant. inappropriately receive a rebuttable The Bureau is concerned that, in the 90 85 FR 86308, 86335 (Dec. 29, 2020). presumption of compliance with ability 91 Id. at 86337. to repay requirements. In general, the 92 Id. at 86339.

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unique circumstances arising from the and, if so, whether the extension should 43(e) Qualified Mortgages COVID–19 pandemic, the combined be longer or shorter than the proposed 43(e)(2) Qualified Mortgages Defined— effects of strong refinance demand, delay to October 1, 2022. General capacity constraints, and the volume of The Bureau also proposes that a final The Bureau is proposing to add consumers with COVID–19 forbearance rule based on this proposal be effective plans could incentivize creditors to comment 43(e)(2)–1 to clarify the 60 days after publication in the Federal increase mortgage interest rate spreads General QM loan definitions available to Register. The Bureau anticipates that for some higher-risk consumers relative creditors for applications received on or to consumers with cleaner credit. The this would make the final rule effective after March 1, 2021 but prior to October Bureau is concerned that this unique before the current July 1, 2021 1, 2022. Specifically, proposed situation may result in temporarily mandatory compliance date. comment 43(e)(2)–1 references comment 43–2 and explains that, prior to the reduced credit access for some higher- Proposed Revisions to Commentary risk yet creditworthy consumers than effective date of the 2021 General QM otherwise would be the case. For the reasons described above, the Amendments, § 1026.43(e)(2) provided a Specifically, loans that exceed the Bureau is proposing to amend comment QM definition that, among other things, pricing thresholds in the General QM 43–2 to reflect an extension of the required that the ratio of the consumer’s total monthly debt to total monthly Final Rule—including loans with DTI mandatory compliance date of the price- income at the time of consummation ratios below 43 percent and GSE loans— based General QM loan definition to will generally not be eligible for QM may not exceed 43 percent. Proposed October 1, 2022. comment 43(e)(2)–1 further explains status if the application is received on Currently, comment 43–2 states that that the 2021 General QM Amendments or after the mandatory compliance date the Bureau’s revisions to Regulation Z removed that requirement and replaced of the General QM Final Rule. This contained in Qualified Mortgage it with the APR thresholds in includes some manufactured housing § 1026.43(e)(2)(vi), among other loans with loan amounts in excess of Definition Under the Truth in Lending revisions. Proposed comment 43(e)(2)–1 $110,260. While some of these Act (Regulation Z): General QM Loan explains that both the QM definition in consumers may be able to obtain QM Definition published on December 29, § 1026.43(e)(2) that was in effect prior to loans due to creditor pricing responses 2020 (2021 General QM Amendments) the 2021 General QM Amendments and or through other available QM loan apply with respect to transactions for which a creditor received an application the General QM loan definition in categories, and other consumers may § 1026.43(e)(2) as amended by the 2021 obtain non-QM loans at potentially on or after March 1, 2021 (effective date). Comment 43–2 states further that General QM Amendments are available higher prices, the Bureau is concerned to creditors for transactions for which a compliance with the 2021 General QM that a portion of these consumers may creditor received an application on or Amendments is mandatory with respect not be able to obtain a mortgage at all. after March 1, 2021 but prior to October The Bureau anticipates that as mortgage to transactions for which a creditor 1, 2022. Proposed comment 43(e)(2)–1 rates increase, capacity constraints will received an application on or after July cross-references comment 43–2 for an be lifted, originator profitability will 1, 2021 (mandatory compliance date). explanation of how creditors determine decline, and these access to credit Comment 43–2 states further that, for a the date the creditor received the concerns will eventually ease. given transaction for which a creditor consumer’s application for purposes of Accordingly, given that the timing of received an application on or after that comment. these events is uncertain, the Bureau March 1, 2021 but prior to July 1, 2021, has preliminarily concluded that a person has the option of complying 43(e)(4) Qualified Mortgage Defined— extending the mandatory compliance either with 12 CFR part 1026 as it is in Other Agencies date to October 1, 2022 will assist effect, or with 12 CFR part 1026 as it Comment 43(e)(4)–2 currently consumers by avoiding unnecessarily was in effect on February 26, 2021, provides that covered transactions that constraining the mortgage market during together with any amendments to 12 met the requirements of a period of heightened volatility and CFR part 1026 that become effective § 1026.43(e)(2)(i) through (iii), were stress due to the COVID–19 pandemic. after February 26, 2021, other than the eligible for purchase or guarantee by the The Bureau requests comment on all 2021 General QM Amendments. Federal National Mortgage Association aspects of its proposal to delay the (Fannie Mae) or the Federal Home Loan mandatory compliance date of the For the reasons described above, the Mortgage Corporation (Freddie Mac) (or General QM Final Rule until October 1, Bureau proposes to change the any limited-life regulatory entity 2022. The Bureau requests comment on references to July 1, 2021 in this succeeding the charter of either) whether the market is likely to comment to October 1, 2022. The operating under the conservatorship or experience disruptions after the proposal would not amend the portion receivership of the Federal Housing expiration of forbearance programs and of comment 43–2 that describes how to Finance Agency pursuant to section foreclosure moratoriums and whether determine the application date. The 1367 of the Federal Housing Enterprises delaying the mandatory compliance explanations in part VII.C of the Financial Safety and Soundness Act of date could provide additional flexibility Supplementary Information to the 1992 (12 U.S.C. 4617), and for which the in responding to those disruptions. The General QM Final Rule regarding how creditor received the consumer’s Bureau also requests comment on the the effective date, optional early application prior to the mandatory extent to which some consumer compliance period, and mandatory compliance date of July 1, 2021, segments are experiencing impaired compliance date apply to transactions continue to be QMs, including those access to credit and on whether would remain accurate, except that covered transactions that were delaying the mandatory compliance references to July 1, 2021 would apply consummated on or after July 1, 2021. date could help address such access-to- to October 1, 2022 instead.93 The headers for comments 43(e)(4)–2 credit concerns. The Bureau requests and –3 refer to July 1, 2021 as the comment on whether the mandatory General QM Final Rule’s mandatory compliance date should be extended 93 85 FR 86308, 86386–87 (Dec. 29, 2020). compliance date.

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For the reasons described above, the regulatory agencies, industry, and requirements, the expanded portfolio Bureau proposes to change the research organizations inform the QM amendments created by the 2018 references to July 1, 2021 in comment Bureau’s impact analyses. Economic Growth, Regulatory Relief, 43(e)(4)–2 and in the headers for The data the Bureau relied upon and Consumer Protection Act,95 or the comments 43(e)(4)–2 and –3 to October provide detailed information on the Seasoned QM definition. The revised 1, 2022. number, characteristics, pricing, and General QM loan definition, which performance of mortgage loans would be the only type of QM available V. Dodd-Frank Act Section 1022(b) originated in recent years. While these Analysis to larger creditors following the data allow the Bureau to estimate the mandatory compliance date, generally A. Overview number of mortgage loans historically requires loans to be priced less than As discussed above, this proposal that would have satisfied the different 2.25 percentage points above APOR.96 would delay the mandatory compliance QM definitions applicable under the The Bureau anticipates that when the date of the General QM loan definition baseline or the proposal, the Bureau mandatory compliance date is reached, from July 1, 2021 to October 1, 2022. In cannot estimate with precision how the main loans affected would be those developing this proposal, the Bureau consumers may respond to changes in priced 2.25 percentage points or higher has considered the potential benefits, the QM definitions by obtaining above APOR that are either costs, and impacts as required by alternative loan products or how conventional loans with DTI ratios at or section 1022(b)(2)(A) of the Dodd-Frank creditors may respond by changing loan below 43 percent (Under-43-Percent-DTI Act. Specifically, section 1022(b)(2)(A) pricing or product offerings. The Bureau conventional loans) or GSE-eligible of the Dodd-Frank Act calls for the seeks additional information or data loans. Retaining the July 1, 2021 Bureau to consider the potential benefits which could inform quantitative mandatory compliance date would and costs of a regulation to consumers estimates of such consumer or creditor affect these loans because they are and covered persons, including the responses. The Bureau seeks comment currently originated as QM loans due to potential reduction of access by on its analysis and additional either the General QM loan definition consumers to consumer financial information or data which could inform that was in effect prior to March 1, 2021 products or services, the impact on quantitative estimates of the number of or the Temporary GSE QM loan depository institutions and credit consumers obtaining GSE-eligible loans definition but, absent changes in unions with $10 billion or less in total which do not satisfy the consider and pricing, could not be originated as QM assets as described in section 1026 of verify requirements in the revised loans and may not be originated at all the Dodd-Frank Act, and the impact on General QM loan definition. after the mandatory compliance date. consumers in rural areas. The Bureau C. Description of the Baseline The Bureau’s analysis of the market under the baseline focuses on Under-43- consulted with the prudential regulators The Bureau considers the benefits, Percent-DTI conventional loans and and other appropriate Federal agencies costs, and impacts of the proposal GSE-eligible loans priced 2.25 regarding the consistency of the against the baseline in which the Bureau percentage points or higher above APOR proposed rule with prudential, market, takes no action and compliance with the because the Bureau estimates most loans or systemic objectives administered by revised General QM loan definition newly obtaining QM status due to the such agencies as required by section becomes mandatory on July 1, 2021, proposal fall within those categories. A 1022(b)(2)(B) of the Dodd-Frank Act. after which the Temporary GSE QM smaller number of GSE-eligible loans B. Data and Evidence loan definition and the General QM loan would not fall within the revised definition that was in effect prior to The discussion in this impact analysis General QM loan definition because relies on data from a range of sources. March 1, 2021 expire and can no longer be used by creditors to obtain QM status they do not satisfy the consider and These include data collected or verify requirements in the revised developed by the Bureau, including on new mortgage loans. Under the proposal, the Temporary GSE QM loan General QM loan definition. The Bureau HMDA 94 data, as well as other publicly also lacks the loan-level documentation available sources. In particular, the data definition and the General QM loan definition that was in effect prior to and underwriting data necessary to and evidence published in the Bureau’s estimate with precision the number of General QM Final Rule inform this March 1, 2021 can continue to be used until October 1, 2022, the new GSE-eligible loans that do not satisfy the analysis. The Bureau also conducted the consider and verify requirements in the Assessment and issued the Assessment mandatory compliance date of the revised General QM loan definition. As revised General QM loan definition. Report as required under section These loans are largely restricted to 1022(d) of the Dodd-Frank Act. The a result, the proposal’s direct market impacts would occur only during the certain streamlined refinance loans Assessment Report provides offered by the GSEs, and the Bureau quantitative and qualitative information period between July 1, 2021 and October 1, 2022. The impact analyses estimates that in the current market on questions relevant to the proposed such loans are considerably less rule, including the effect of QM status assume the GSEs will remain in conservatorship for the duration of this numerous than Under-43-Percent-DTI relative to non-QM status on access to conventional loans and GSE-eligible credit. Consultations with other period, thus allowing creditors to use the Temporary GSE QM loan definition. loans priced 2.25 percentage points or higher above APOR.97 However, 94 HMDA requires many financial institutions to Under the baseline, when the maintain, report, and publicly disclose loan-level Temporary GSE QM loan definition and 95 information about mortgages. These data help show the General QM loan definition that was Public Law 115–174, 132 Stat. 1296 (2018). 96 The comparable thresholds are 6.5 percentage whether creditors are serving the housing needs of in effect prior to March 1, 2021 expire their communities; they give public officials points over APOR for loans priced under $66,156, information that helps them make decisions and on July 1, 2021, conventional loans 3.5 percentage points over APOR for loans priced policies; and they shed light on lending patterns could only receive QM status under the under $110,260 but at or above $66,156, and 6.5 that could be discriminatory. HMDA was originally Bureau’s rules by underwriting percentage points over APOR for loans for manufactured housing priced under $110,260. 12 enacted by Congress in 1975 and is implemented according to the revised General QM by Regulation C. See Bureau of Consumer Fin. Prot., CFR 1026.43(e)(2)(vi)(A) through (D). Mortgage Data (HMDA), https:// requirements, Small Creditor QM 97 As of Q3 2020, only 105 loans had been www.consumerfinance.gov/data-research/hmda/. requirements, Balloon Payment QM originated through the GSEs’ High-LTV Refinance

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demand for such loans could increase if 2. Benefits to Covered Persons loans would pay higher prices for these housing market conditions deteriorate. The proposal’s primary benefit to conventional QM loans relative to the baseline. D. Potential Benefits and Costs to covered persons, specifically mortgage In addition, consumers who would Covered Persons and Consumers creditors, is the continued profits from originating QM loans priced 2.25 have obtained non-QM loans under the 1. Benefits to Consumers percentage points or higher above baseline but instead obtain QM loans under the proposal forgo the benefit of The primary benefit to consumers of APOR, particularly Under-43-Percent- retaining the ATR causes of action and the proposal is the availability of DTI conventional loans and GSE-eligible defenses against foreclosure. conventional QM loans priced 2.25 loans. For the estimated 33,000 percentage points or higher above additional conventional QM loans 4. Costs to Covered Persons priced 2.25 percentage points or higher APOR—including both Under-43- The proposal would involve minimal above APOR under the proposal, the Percent-DTI conventional loans and costs to covered persons. The most Bureau estimates an average loan size of GSE-eligible loans—during the period sizable potential costs to covered $190,000 and thus a total loan volume from July 1, 2021 to October 1, 2022. persons are effectively transfers between of $6.3 billion. Under the baseline, after Relative to the baseline, the Bureau creditors for the duration of the July 1, 2021, creditors would be unable estimates that between July 1, 2021 and mandatory compliance date delay, to originate such loans under the October 1, 2022, approximately 33,000 reflecting temporarily reduced loan General QM loan definition that was in additional consumers would obtain origination volume for creditors who effect prior to March 1, 2021 or the conventional QM loans priced 2.25 primarily originate FHA or Under-43- Temporary GSE QM loan definition and percentage points or higher above APOR Percent-DTI non-QM loans and would instead have to originate such under the proposal due to the temporarily increased origination loans as FHA, Small Creditor QM, or availability of the General QM loan volume for lenders who primarily non-QM loans, or originate at a price at definition that was in effect prior to originate Under-43-Percent-DTI or below 2.25 percentage points over March 1, 2021 and the Temporary GSE conventional loans priced 2.25 98 APOR as General QM loans. Creditors’ QM loan definition. While many of percentage points or more over APOR. these consumers may obtain mortgages current preference for originating QM of some kind under the baseline, the loans priced 2.25 percentage points or 5. Other Benefits and Costs largest benefits to consumers accrue to more over APOR likely reflects In delaying the expiration of the the consumers who would obtain a advantages in a combination of costs or General QM loan definition that was in conventional QM loan under the guarantee fees (particularly relative to effect prior to March 1, 2021, and the proposal but would not obtain a FHA loans), liquidity (particularly Temporary GSE QM loan definition, the mortgage under the baseline. relative to Small Creditor QM), or proposal would delay any effects of the Under the baseline, some of these litigation and credit risk (particularly expiration on the development of the 33,000 consumers may be able to obtain relative to non-QM). Moreover, QM secondary market for private (non-GSE) General QM loans priced below 2.25 loans are exempt from the Dodd-Frank mortgage loan securities. When the percentage points over APOR due to Act risk retention requirement whereby Temporary GSE QM loan definition creditor responses to the General QM creditors that securitize mortgage loans expires, those loans that do not fit Final Rule or obtain QM loans under the are required to retain at least 5 percent within the revised General QM loan Small Creditor QM definition. Others of the credit risk of the security, which definition represent a potential new may instead obtain FHA loans, likely adds significant cost. As a result, the market for private securitizations. Thus, paying higher total loan costs as proposal conveys benefits to mortgage the proposal would slightly reduce the discussed in the General QM Final Rule. creditors originating General QM and scope of the potential non-QM market Finally, a portion of these consumers Temporary GSE QM loans on each of for the duration of the mandatory may obtain non-QM loans under the these dimensions. compliance date delay, likely lowering Given creditors’ preference for baseline, but the Bureau expects some profits and revenues for participants in originating QM loans, the proposal may consumers may not be able to obtain a the private secondary market. This allow lenders to avoid price reductions mortgage at all. would effectively be a transfer from on some loans that would be necessary The proposal would also benefit those these private secondary market to satisfy the revised General QM loan consumers seeking GSE-eligible loans participants to participants in the definition under the baseline. This that do not satisfy the consider and agency secondary market. verify requirements in the revised would increase revenue for creditors on General QM loan definition. Such loans, such loans originated during the July 1, E. Potential Specific Impacts of the including GSE streamlined refinance 2021 to October 1, 2022 period. Proposed Rule loans, may not be available to 3. Costs to Consumers 1. Potential Impact on Depository consumers under the baseline. For the duration of the July 1, 2021 to Institutions and Credit Unions With $10 October 1, 2022 period, creditors who Billion or Less in Total Assets, as Option since the inception of the program. See Described in Section 1026 FHFA Foreclosure Prevention and Refinance Report would have reduced prices on some (Q3 2020), https://www.fhfa.gov/AboutUs/Reports/ loans to satisfy the revised General QM The proposal’s expected impact on ReportDocuments/3Q2020FPR.pdf. loan definition under the baseline may depository institutions and credit 98 This estimate assumes that the GSEs continue delay reducing loan prices under the unions that are also creditors making to originate loans priced 2.25 percentage points or covered loans (depository creditors) higher above APOR between July 1, 2021 and proposal. This is likely to occur for October 1, 2022. If the GSEs do not originate loans some uncertain fraction of the estimated with $10 billion or less in total assets is above the General QM Final Rule’s pricing 33,000 additional conventional loans similar to the expected impact on larger thresholds during this period, the Bureau estimates within the General QM loan definition creditors and non-depository creditors. that approximately 28,000 additional consumers Those smaller creditors originating would obtain conventional QM loans priced 2.25 that was in effect prior to March 1, 2021 percentage points or higher above APOR under the and the Temporary GSE QM loan portfolio loans can originate Small proposal. definition. Consumers obtaining such Creditor QM loans priced 2.25

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percentage points or higher above representatives prior to proposing a rule List of Subjects 104 APOR, and thus may rely less on the for which an IRFA is required. Advertising, Banks, Banking, General QM loan definition that was in An IRFA is not required for this Consumer protection, Credit, Credit effect prior to March 1, 2021 and the proposal because the proposal, if unions, Mortgages, National banks, Temporary GSE QM loan definition for adopted, would not have a significant Reporting and recordkeeping originating such loans. If the General economic impact on a substantial requirements, Savings associations, QM mandatory compliance date would number of small entities. The Bureau Truth-in-lending. confer a competitive advantage to these does not expect the final rule to impose small creditors in their origination of Authority and Issuance costs on small entities relative to the loans priced 2.25 percentage points or baseline. Under the baseline, on July 1, For the reasons set forth in the higher above APOR, the proposal would 2021, the Temporary GSE QM loan preamble, the Bureau proposes to delay this outcome. definition and the General QM loan amend Regulation Z, 12 CFR part 1026, 2. Potential Impact of the Proposed definition that was in effect prior to as set forth below: March 1, 2021 expire, and therefore no Provisions on Consumers in Rural Areas PART 1026—TRUTH IN LENDING creditor—including small entities— (REGULATION Z) The proposal’s expected impact on would be able to originate QM loans consumers in rural areas is similar or under either definition after that date. ■ 1. The authority citation for part 1026 slightly larger than the expected impact Under the proposal, small entities that continues to read as follows: on non-rural areas. Based on 2018 would otherwise not be able to originate HMDA data, the Bureau estimates that QM loans under these definitions would Authority: 12 U.S.C. 2601, 2603–2605, loans priced 2.25 percentage points or 2607, 2609, 2617, 3353, 5511, 5512, 5532, be able to originate such loans with QM 5581; 15 U.S.C. 1601 et seq. higher above APOR that are either status until October 1, 2022. Thus, the Under-43-Percent-DTI conventional Bureau anticipates that the proposal ■ 2. In supplement I to part 1026: ■ loans or GSE-eligible loans reflect a would only reduce burden on small a. Under Section 1026.43—Minimum slightly larger share of the conventional entities relative to the baseline. Standards for Transactions Secured by loan market in rural areas (0.8 percent) a Dwelling, revise introductory relative to non-rural areas (0.6 Accordingly, the Acting Director paragraph 2; percent).99 certifies that this proposal, if adopted, ■ b. Under section 43(e)(2) Qualified would not have a significant economic mortgage defined—general, add VI. Regulatory Flexibility Act Analysis impact on a substantial number of small paragraph 1; and entities. The Bureau requests comment ■ c. Revise section 43(e)(4) Qualified The Regulatory Flexibility Act on its analysis of the impact of the (RFA),100 as amended by the Small mortgage defined—other agencies. proposal on small entities and requests The revisions and addition read as Business Regulatory Enforcement any relevant data. Fairness Act of 1996,101 requires each follows: agency to consider the potential impact VII. Paperwork Reduction Act Supplement I to Part 1026—Official of its regulations on small entities, Interpretations including small businesses, small Under the Paperwork Reduction Act 105 * * * * * governmental units, and small not-for- of 1995 (PRA), Federal agencies are Section 1026.43—Minimum profit organizations. The RFA defines a generally required to seek, prior to Standards for Transactions Secured by a ‘‘small business’’ as a business that implementation, approval from the Dwelling meets the size standard developed by Office of Management and Budget the Small Business Administration (OMB) for information collection * * * * * pursuant to the Small Business Act.102 requirements. Under the PRA, the 2. General QM Amendments Effective Bureau may not conduct or sponsor, on March 1, 2021. The Bureau’s The RFA generally requires an agency and, notwithstanding any other revisions to Regulation Z contained in to conduct an initial regulatory provision of law, a person is not Qualified Mortgage Definition Under the flexibility analysis (IRFA) and a final required to respond to, an information Truth in Lending Act (Regulation Z): regulatory flexibility analysis (FRFA) of collection unless the information General QM Loan Definition published any rule subject to notice-and-comment collection displays a valid control on December 29, 2020 (2021 General rulemaking requirements, unless the number assigned by OMB. QM Amendments) apply with respect to agency certifies that the rule would not transactions for which a creditor have a significant economic impact on The proposal would amend 12 CFR received an application on or after a substantial number of small part 1026 (Regulation Z), which March 1, 2021 (effective date). 103 entities. The Bureau also is subject to implements TILA. OMB control number Compliance with the 2021 General QM certain additional procedures under the 3170–0015 is the Bureau’s OMB control Amendments is mandatory with respect RFA involving the convening of a panel number for Regulation Z. The Bureau to transactions for which a creditor to consult with small business has determined that this proposal does received an application on or after not contain any new or substantively October 1, 2022 (mandatory compliance 99 These statistics are estimated based on revised information collection date). For a given transaction for which originations from the first nine months of the year, requirements other than those to allow time for loans to be sold before HMDA a creditor received an application on or previously approved by OMB under that after March 1, 2021 but prior to October reporting deadlines. OMB control number 3170–0015. 100 5 U.S.C. 601 et seq. 1, 2022, a person has the option of 101 Public Law 104–121, tit. II, 110 Stat. 857 The Bureau welcomes comments on complying either: With 12 CFR part (1996). these determinations or any other aspect 1026 as it is in effect; or with 12 CFR 102 5 U.S.C. 601(3) (the Bureau may establish an of the proposal for purposes of the PRA. part 1026 as it was in effect on February alternative definition after consultation with the Small Business Administration and an opportunity 26, 2021, together with any amendments for public comment). 104 5 U.S.C. 609. to 12 CFR part 1026 that become 103 5 U.S.C. 603 through 605. 105 44 U.S.C. 3501 et seq. effective after February 26, 2021, other

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than the 2021 General QM 43(e)(4) Qualified Mortgage Defined— DEPARTMENT OF TRANSPORTATION Amendments. For transactions subject Other Agencies to § 1026.19(e), (f), or (g), creditors Federal Aviation Administration determine the date the creditor received 1. General. The Department of the consumer’s application, for Housing and Urban Development, 14 CFR Part 39 Department of Veterans Affairs, and the purposes of this comment, in [Docket No. FAA–2020–1182; Product accordance with § 1026.2(a)(3)(ii). For Department of Agriculture have Identifier 2018–SW–036–AD] promulgated definitions for qualified transactions that are not subject to RIN 2120–AA64 § 1026.19(e), (f), or (g), creditors can mortgages under mortgage programs determine the date the creditor received they insure, guarantee, or provide under Airworthiness Directives; Airbus the consumer’s application, for applicable law. Cross-references to those Helicopters purposes of this comment, in definitions are listed in § 1026.43(e)(4) AGENCY: accordance with either § 1026.2(a)(3)(i) to acknowledge the covered transactions Federal Aviation Administration (FAA), DOT. or (ii). covered by those definitions are qualified mortgages for purposes of this ACTION: Notice of proposed rulemaking * * * * * section. (NPRM). 43(e)(2) Qualified Mortgage Defined— 2. Mortgages for which the creditor SUMMARY: The FAA proposes to General received the consumer’s application supersede Airworthiness Directive (AD) prior to October 1, 2022. Covered 1. General QM Amendments Effective 2016–08–20 for certain Airbus transactions that met the requirements on March 1, 2021. Comment 43–2 Helicopters (previously Eurocopter of § 1026.43(e)(2)(i) thorough (iii), were provides that, for a transaction for France) EC130B4 and EC130T2 eligible for purchase or guarantee by the which a creditor received an application helicopters. AD 2016–08–20 requires Federal National Mortgage Association on or after March 1, 2021 but prior to repetitively inspecting the tail boom to (Fannie Mae) or the Federal Home Loan October 1, 2022, a person has the option Fenestron junction frame (junction Mortgage Corporation (Freddie Mac) (or of complying either: With 12 CFR part frame) for a crack. Since the FAA issued any limited-life regulatory entity AD 2016–08–20, additional cracks have 1026 as it is in effect; or with 12 CFR succeeding the charter of either) been reported and a design change that part 1026 as it was in effect on February operating under the conservatorship or modifies the junction frame has become 26, 2021, together with any amendments receivership of the Federal Housing available. This proposed AD would to 12 CFR part 1026 that become Finance Agency pursuant to section continue to require inspecting the effective after February 26, 2021, other 1367 of the Federal Housing Enterprises junction frame with the horizontal than the revisions to Regulation Z Financial Safety and Soundness Act of stabilizer removed, and would propose contained in Qualified Mortgage 1992 (12 U.S.C. 4617), and for which the to expand the applicability, revise the Definition Under the Truth in Lending creditor received the consumer’s compliance time and the inspection Act (Regulation Z): General QM Loan application prior to the mandatory procedures for inspecting the junction Definition published on December 29, compliance date of October 1, 2022 frame, add inspection procedures for 2020 (2021 General QM Amendments). continue to be qualified mortgages for certain helicopters, allow repair of the Prior to the effective date of the 2021 junction frame, and would require the purposes of this section, including General QM Amendments, modifying and then repetitively those covered transactions that were § 1026.43(e)(2) provided a qualified inspecting the junction frame and consummated on or after October 1, mortgage definition that, among other reporting certain information. The 2022. things, required that the ratio of the actions of this proposed AD are consumer’s total monthly debt to total 3. Mortgages for which the creditor intended to address an unsafe condition monthly income at the time of received the consumer’s application on on these products. consummation not exceed 43 percent. or after March 1, 2021 and prior to DATES: The FAA must receive comments The 2021 General QM Amendments October 1, 2022. For a discussion of the on this proposed AD by April 5, 2021. removed that requirement and replaced optional early compliance period for the ADDRESSES: You may send comments by it with the annual percentage rate 2021 General QM Amendments, please any of the following methods: thresholds in § 1026.43(e)(2)(vi), among see comment 43–2. • Federal eRulemaking Docket: Go to other revisions. Both the qualified 4. [Reserved]. https://www.regulations.gov. Follow the mortgage definition in § 1026.43(e)(2) 5. [Reserved]. online instructions for sending your that was in effect prior to the 2021 comments electronically. General QM Amendments and the * * * * * • Fax: 202–493–2251. qualified mortgage definition in Dated: March 2, 2021. • Mail: Send comments to the U.S. § 1026.43(e)(2) as amended by the 2021 David Uejio, Department of Transportation, Docket General QM Amendments are available Acting Director, Bureau of Consumer Operations, M–30, West Building to creditors for transactions for which a Financial Protection. Ground Floor, Room W12–140, 1200 New Jersey Avenue SE, Washington, DC creditor received an application on or [FR Doc. 2021–04698 Filed 3–3–21; 4:15 pm] after March 1, 2021 but prior to October 20590–0001. BILLING CODE 4810–AM–P • Hand Delivery: Deliver to the 1, 2022. See comment 43–2 for an ‘‘Mail’’ address between 9 a.m. and 5 explanation of how creditors determine p.m., Monday through Friday, except the date the creditor received the Federal holidays. consumer’s application for purposes of that comment. Examining the AD Docket * * * * * You may examine the AD docket on the internet at https://

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