On August 18, the CFPB released a Notice of Proposed Rulemaking (NPRM) to create a new category of Qualified Mortgages to be called “Seasoned QMs”.  The CFPB concluded that if a loan has performed for a long enough period of time and meets certain underwriting conditions and product restrictions, it is warranted to conclusively presume that the creditor’s determination of a consumer’s ability to repay at consummation was reasonable.  The new QM category would designate the loan as a safe harbor QM, even if the loan did not meet the criteria of any of the other QM definitions at consummation.

Under the NPRM, a loan originated as a rebuttable presumption QM or as a Non-QM loan will be granted a safe harbor presumption that it complies with the ATR requirements if it (1) meets certain product restrictions and (2) is held in portfolio during the seasoning period and meets specified performance criteria.  The product restrictions require that (1) the loan is secured by a first lien; (2) the loan has a fixed rate, with fully amortizing payments and no balloon payment; (3) the loan term does not exceed 30 years; and (4) the total points and fees do not exceed specified limits.