In advance of the expiration of a temporary qualified mortgage provision (the "GSE Patch") in the Ability to Repay/Qualified Mortgage Rule, the CFPB is considering amending the definition of "qualified mortgage" in Regulation Z (the "Truth in Lending Act").
In an advance notice of proposed rulemaking, the CFPB explained that under the GSE Patch provision, certain mortgage loans may be eligible for purchase or guarantee by Fannie Mae and Freddie Mac. The CFPB said it intends to allow the GSE Patch to expire in January 2021.
Specifically, the CFPB requested comments on whether the definition of qualified mortgage (i) should be based on the direct measure of a consumer's personal finances, such as debt-to-income ratio or residual income, and how that measure should be structured, or (ii) should, instead, include an alternative method for assessing financial capacity (or should be limited to the express statutory criteria).
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