In a letter to credit unions, Rodney Hood, NCUA chairman, said that two final rules amending the Ability-to-Repay/Qualified Mortgage rule in Regulation Z will become effective on March 1, 2021. The final rules were published in the Federal Register by the CFPB on Dec. 29, 2020.
These final rules are:
- the General QM final rule, which replaces the existing 43% debt-to-income ratio limit with price-based thresholds; and
- the Seasoned QM final rule, which creates a new category of qualified mortgage.
The letter stated that, with some exceptions, Regulation Z requires lenders to make reasonable, good-faith determinations of a consumers’ ability to repay any residential mortgage loans. Loans that meet Regulation Z requirements for qualified mortgages obtain certain protections from liability. In addition, Regulation Z contains several categories of QMs, including the General QM category.
Hood said that credit unions should read the provisions of the General QM and Seasoned QM final rules to determine their effects on operations. Credit unions can access a compliance guide and other resources provided by the CFPB.