![]() ![]() The annual percentage rate (APR) cannot exceed the average prime offer rate (APOR) for a comparable transaction on the date the interest rate is set by: Loans must meet the following conditions to be considered a General QM under the revised definition: Price-based limit Your underwriting standards should state what the institution’s required DTI will be and what criteria are needed for exceptions to be made to the required DTI. Once implemented, employees should stop referencing the prior QM rules established in Appendix Q of Regulation Z, since they will be eliminated, along with the 43% DTI requirement. These policies and procedures will allow your employees to understand and reference all requirements of the new rule. You must also retain documentation showing how you took into account income or assets, debt obligations, alimony, child support and monthly DTI ratio or residual income in your ATR determination, including how you applied your policies and procedures, to meet the General QM requirements. Written policies and procedures must include how you take into account - pursuant to your underwriting standards - income or assets, debt obligations, alimony, child support and monthly debt-to-income (DTI) ratio or residual income in your ability-to-repay (ATR) determination. What does the final rule require?įinancial institutions are required to have written policies and procedures under the new rule. Since investors are no longer allowing loans sold to the government-sponsored entities Fannie Mae and Freddie Mac to use the temporary Government-Sponsored Enterprises (GSE) patch QM definition, many financial institutions have already been using the price-based General QM definition. The rule will require creditors to use the revised price-based General QM definition for applications received on or after October 1, 2022, but it’s optional to use it now for applications received since March 1, 2021. Are you compliant with the General Qualified Mortgage (QM) Final Rule? Although the Consumer Financial Protection Bureau extended the mandatory compliance date until October 1, 2022, it’s not too early for your financial institution to ensure you’ve updated your procedures. ![]()
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