New QM Standards Under the Truth in Lending Act
On December 10th, the Consumer Financial Protection Bureau (CFPB) issued two final rules that make significant changes to Regulation Z's ability to repay requirements. With an effective date of July 1st, financial institutions need to start preparing now for these changes. First, the CFPB is changing the requirements for a loan to be classified as a Qualified Mortgage (QM). Going forward, a QM must meet the following four-part test: Pricing Test Product Test Points and Fees Test Underwriting Test Second, the CFPB has established a new category of qualified mortgages, the Seasoned QM. Seasoned QM's must meet certain product, underwriting and performance requirements.