CFPB Issues Final Rule Extending GSE Patch

Housing Finance

The Consumer Financial Protection Bureau (CFPB) today issued a final rule to extend the "Government-Sponsored Enterprise (GSE) Patch" that allows mortgage loans that are eligible for purchase by Fannie Mae and Freddie Mac to receive a safe harbor granted to qualified mortgages (QMs).

The GSE Patch was scheduled to expire on Jan. 10, 2021, but the CFPB's final rule will extend the GSE Patch until the date a final rule amending the General QM loan definition becomes effective. The GSE Patch will expire if Fannie Mae and Freddie Mac exit conservatorship.

The CFPB established a general QM standard for loans where the consumer's debt-to-income (DTI) ratio is 43% or less, but the GSE Patch allows certain loans to exceed the 43% DTI ratio.

The CFPB issued a proposal to amend the QM loan definition on June 22, 2020, the same day it issued a proposal to extend the GSE Patch. The agency is currently developing a final rule amending the General QM loan definition and is planning to issue it at a later date.

For more information, contact Curtis Milton at 202-266-8597.

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