On August 18,  2020 the Consumer Financial Protection Bureau (“CFPB”) issued a notice of proposed rulemaking to amend the Ability to Repay/Qualified Mortgage (“ATR/QM”) rule in Regulation Z. This proposal seeks to add a new category of qualified mortgages (“QM”), called the Seasoned QM.  The CFPB defines a Seasoned QM as a fixed-rate loan secured by a first lien which has regular, fully amortizing periodic payments that are substantially equal in amount, have a term not exceeding 30 years, and have total points and fees not in excess of the defined limits.

The CFPB published a summary of the proposal which includes additional criteria for the loan to be eligible, including the underwriting considerations, term the loan should remain on the creditor’s portfolio, and performance requirements.

Under the proposed rule, if a loan is a Seasoned QM and falls within the Rule’s safe harbor, then the loan would be conclusively presumed to comply with the ATR/QM Rule, even if it is higher priced.

ATR/QM Resources