In order to meet that special temporary QM status, the loans must satisfy the requirements imposed by the respective GSE (or agency), and meet the following additional requirements: (a) contain a maximum loan term of 30 years (b) not include certain product features like negative amortization or interest only payments and (c) limit points and fees to 3%.
In addition to that standard category of QMs, the CFPB carved out a special category of loans that also will, at least temporarily, enjoy QM status - namely, those eligible for purchase, insurance, or guarantee by specified government agencies, including the GSEs. This FHFA Directive (the “Directive”) will ensure that the GSEs only purchase loans that are fully amortizing, have a term of 30 years or less, and have points and fees limited to 3% of the total loan amount (and meet all the other QM criteria).Īs discussed in our client alert, the CFPB issued a final rule on Janu(the “Final Rule”), later amended on May 29, 2013, defining, among other things, a category of “safe” mortgage loans (i.e., QMs) that will be deemed or presumed to comply with the rule’s complex ability-to-repay requirements. On May 6, 2013, the FHFA, the regulator (and conservator) of Fannie Mae and Freddie Mac (the “GSEs”), directed the GSEs to limit their mortgage acquisitions to Qualified Mortgages (or loans that are otherwise exempt from the CFPB’s Ability to Repay Rule), effective January 10, 2014.
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