In December 2020, the CFPB published the final rule amending the General QM definition as a result of the sunsetting of the Temporary Agency QM rule that was previously set to expire on January 10, 2021. The final rule became effective with mandatory compliance by October 1, 2022.
When the QM rule was originally introduced 2013 it included a temporary rule to allow the GSEs to define what a QM loan that was salable to Fannie Mae or Freddie Mac. In making that temporary rule, the CFPB included an automatic sunset date of January 10, 2021. At that time, the temporary authority for the GSEs to define QM for their purposes would expire and such loans would be subject to the general rule applicable to all other loans. The CFPB issued a final rule on October 20, 2020 to extend the sunset date of the Temporary Agency rule to the compliance date of the new general QM rule.
The final rule published on December 20, 2020, replaced the Temporary Agency rule and the existing General QM rule with a revised General QM rule that would apply both to loans salable to the GSEs and all other loans that would otherwise be subject to the General QM rule. The primary revision in this final rule was to replace the requirement for a Debt-to-Income ratio below 43% with an APOR Price-Based Limit. The compliance period for the revised General QM rule was originally effective as of March 1, 2021, which was passed under the CFPB leadership appointed by former President Trump. Once new leadership of the CFPB was established in early 2021, the CFPB postponed the effective date from March 1, to a new optional compliance period beginning July 1, 2021, with a mandatory compliance date of October 1, 2022.
During the period after the CFPB published the initial mandatory compliance date of March 1 and July 1, the Federal Housing Finance Agency negotiated changes to their Preferred Stock Purchase Agreement with Fannie Mae and Freddie Mac that would limit the purchases of loans to only those that met the new General QM definition. As a result of this, the GSEs effectively defined a loan that was salable to them as only loans which met the new General QM definition as of July 1, 2021. As the prior Temporary Agency Rule was premised on the basis of allowing the GSEs to define what loans would meet QM, and since as of July 1, only those loans that met the new General QM definition would be a QM loan according to the GSEs, in effect the Temporary Agency rule was redefined to the new General QM rule as of July 1, 2021. See our discussion of this change here.
As a result of these moves, DocMagic began applying the new General QM definition to all loans, including those which formerly would have been applicable under the Temporary Agency rule, as of July 1, 2021. Therefore, while the mandatory compliance date for the new General QM definition is October 1, 2022, DocMagic put in place all relevant updates as of July 1, 2021, so that there is no change to behavior that users will see starting October 1.
