CFPB will delay QM rule’s compliance date

The Consumer Financial Protection Bureau plans to delay the compliance date of the Qualified Mortgage rule and may revoke or amend a separate rule that created a new category of “seasoned” QM loans.

Acting CFPB Director Dave Uejio said on Tuesday that the CFPB will issue a proposed rule soon to delay the July 1 mandatory compliance date for the general QM rule. The bureau said it also will weigh at a later date whether to initiate another rulemaking “to reconsider other aspects of the QM rule.”

The changes are not a surprise since Uejio said earlier this month that the CFPB would reconsider any rules implemented under the Trump administration that had not yet gone into effect. The underwriting rule was created after the 2008 financial crisis to set parameters, such as a 43% debt-to-income ratio, that defined loans as safe, and protected lenders using such criteria from legal liability.

“An extension of the compliance deadline would allow lenders more time in which they could make QM loans based on a debt-to-income ratio or whether the loans are eligible for sale to Fannie Mae or Freddie Mac, and not just a pricing cut off,” Uejio said in a blog post.

Still, mortgage lenders may be feeling some whiplash given that former CFPB Director Kathy Kraninger, a Trump appointee, just proposed an overhaul in June to replace the 43% DTI ratio with a pricing threshold for loans to be considered safe, qualified mortgages.

In August, Kraninger also proposed a rule that would allow QM loans held on a lender’s balance sheet for 36 months — or “seasoned loans — to become eligible for so-called QM status, based on a borrower’s past three years of payment history.

The QM rule has been the subject of intense debate since 2014 when loans backed by Fannie Mae and Freddie Mac were given an exemption from the QM rule’s 43% DTI requirement. The exemption for the government-sponsored enterprises — known as the GSE “patch” — was supposed to expire in January. The bureau had previously set a March 1 effective date for both the QM rule and seasoned QM rule with a mandatory compliance date of July 1.

Source: nationalmortgagenews.com

CFPB’s Kraninger resigns just as Biden takes office

Consumer Financial Protection Bureau Director Kathy Kraninger resigned Wednesday, clearing the way for the Biden administration to pick a successor.

Kraninger’s departure from the agency with the change of power in Washington was widely expected. Though her term would not have officially ended until 2023, many of her policies supported by the Trump administration had roiled Democrats.

After the Supreme Court ruled last year that a president can fire a CFPB chief at will, many speculated that President Biden would force her out if she did not leave on her own. She ended up resigning on the same day Biden was inaugurated. In a tweet, Kraninger said she was leaving “as requested by the Biden administration.”

“I support the Constitutional prerogative of the President to appoint senior officials within the government who support the President’s policy priorities, which ensures our government is responsive to the will of the people as expressed in presidential elections,” Kraninger wrote in a letter to staff.

“I support the Constitutional prerogative of the President to appoint senior officials within the government who support the President’s policy priorities, which ensures our government is responsive to the will of the people as expressed in presidential elections,” said former CFPB Director Kathy Kraninger.

“I support the Constitutional prerogative of the President to appoint senior officials within the government who support the President’s policy priorities, which ensures our government is responsive to the will of the people as expressed in presidential elections,” said former CFPB Director Kathy Kraninger.

Bloomberg News

However, it was not immediately clear whether the Biden administration had named an acting director as Biden’s nominee for permanent director, Rohit Chopra, awaits Senate confirmation. Deputy Director Tom Pahl had retired Jan. 19; the bureau’s No. 2 typically becomes acting director during any leadership vacancy.

Kraninger, a career civil servant, highlighted some of her accomplishments at the bureau and said she was guided during the past two years by the rule of law.

“It has been an honor to serve the American people for over 20 years, and my privilege to do so alongside the many career and political civil servants who put country over self,” Kraninger wrote. “Throughout my career, I have focused on implementing common-sense solutions to complex problems and delivering real value for the American people.”

Under Kraninger, the CFPB issued final regulations on payday lending, debt collection and Home Mortgage Disclosure Act data.

She also said that she hoped her legacy “will be the maturation of the CFPB itself and its role within the financial services regulatory framework.”

An acting director can be chosen from any of the senior officials at the CFPB who have been there for at least 90 days or from among officials who have already been confirmed by the Senate to an existing post.

Source: nationalmortgagenews.com