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Federal Register / Vol. 86, No. 42 / Friday, March 5, 2021 / Proposed Rules
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SUPPLEMENTARY INFORMATION:

I. Summary of the Proposed Rule The Ability-to-Repay/Qualified Mortgage Rule ATR/QM Rule requires a creditor to make a reasonable, good faith determination of a consumers ability to repay a residential mortgage loan according to its terms. Loans that meet the ATR/QM Rules requirements for qualified mortgages QMs obtain certain protections from liability. The ATR/QM Rule defines several categories of QMs.
One QM category defined in the ATR/
QM Rule is the General QM category.
General QMs must comply with the ATR/QM Rules prohibitions on certain loan features, its points-and-fees limits, and its underwriting requirements.
Under the original ATR/QM Rule, the ratio of the consumers total monthly debt to total monthly income DTI or DTI ratio could not exceed 43 percent for a loan to meet the General QM loan definition. In December 2020, the Bureau issued the General QM Final Rule, which amended Regulation Z by replacing the General QM loan definitions DTI limit with a limit based on loan pricing and making other changes to the General QM loan definition.1 The General QM Final Rule took effect on March 1, 2021, and it provides a mandatory compliance date of July 1, 2021. For covered transactions for which creditors receive an application on or after the March 1, 2021 effective date and before the July 1, 2021 mandatory compliance date, creditors have the option of complying with either the revised General QM loan definition or the General QM loan definition in effect prior to March 1, 2021. Only the revised General QM loan definition is available for applications received on or after July 1, 2021.
The Bureau is proposing to delay the mandatory compliance date of the General QM Final Rule until October 1, 2022. Specifically, the proposal would amend comments 432 and 43e42
and 3 to reflect an extension of the mandatory compliance date of the General QM Final Rule by changing the date July 1, 2021 where it appears in those comments to October 1, 2022.
The proposal would also add new comment 43e21 to clarify the General QM loan definitions available to creditors for applications received on or after March 1, 2021 but prior to October 1, 2022.
If this proposal is finalized, for covered transactions for which creditors receive an application on or after March 1, 2021 and before October 1, 2022, 1 85

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creditors would have the option of complying with either the revised General QM loan definition or the General QM loan definition in effect prior to March 1, 2021. Under the proposal, the revised regulations would apply to covered transactions for which creditors receive an application on or after October 1, 2022.
The ATR/QM Rule also defines a second, temporary category of QMs for mortgages that 1 comply with the same loan-feature prohibitions and pointsand-fees limits as General QMs and 2
are eligible to be purchased or guaranteed by either the Federal National Mortgage Association Fannie Mae or the Federal Home Loan Mortgage Corporation Freddie Mac collectively, the government-sponsored enterprises or GSEs, while operating under the conservatorship or receivership of the Federal Housing Finance Agency FHFA. This proposed rule refers to these loans as Temporary GSE QM loans, and the provision that created this loan category is commonly known as the GSE Patch. In October 2020, the Bureau issued a final rule stating that the Temporary GSE QM loan definition will be available only for covered transactions for which the creditor receives the consumers application before the mandatory compliance date of the General QM
Final Rule.2 Therefore, under the proposal, the Temporary GSE QM loan definition would expire upon the earlier of October 1, 2022 or the date the applicable GSE exits Federal conservatorship rather than on the current mandatory compliance date of July 1, 2021 or the date the applicable GSE exits Federal conservatorship.
As discussed below, the Bureau is proposing to delay the mandatory compliance date of the General QM
Final Rule to help ensure access to responsible, affordable mortgage credit and to preserve flexibility for consumers, particularly those affected by the COVID19 pandemic. This proposal would not make other changes to the General QM loan definition. The Bureau plans to evaluate the General QM Final Rules amendments to the General QM loan definition and will consider at a later date whether to initiate another rulemaking to reconsider other aspects of the General QM Final Rule.
The Bureau proposes that a final rule based on this proposal be effective 60
days after publication in the Federal Register. The Bureau anticipates that this would make the final rule effective 2 85

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before the current July 1, 2021
mandatory compliance date.
II. Background A. Dodd-Frank Act Amendments to the Truth in Lending Act and the January 2013 Final Rule The Dodd-Frank Wall Street Reform and Consumer Protection Act DoddFrank Act 3 amended the Truth in Lending Act TILA 4 to establish, among other things, ability-to-repay ATR requirements in connection with the origination of most residential mortgage loans.5 As amended by the Dodd-Frank Act, TILA prohibits a creditor from making a residential mortgage loan unless the creditor makes a reasonable and good faith determination based on verified and documented information that the consumer has a reasonable ability to repay the loan.6 TILA identifies the factors a creditor must consider in making a reasonable and good faith assessment of a consumers ability to repay. These factors are the consumers credit history, current and expected income, current obligations, DTI ratio or residual income after paying nonmortgage debt and mortgage-related obligations, employment status, and other financial resources other than equity in the dwelling or real property that secures repayment of the loan.7
A creditor may not be certain whether its ATR determination is reasonable in a particular case. TILA addresses this potential uncertainty by defining a category of loanscalled QMsfor which a creditor may presume that the loan has met the ATR requirements.8
The statute generally defines a QM to mean any residential mortgage loan for which:
The loan does not have negative amortization, interest-only payments, or balloon payments;
The loan term does not exceed 30
years;
3 Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111203, 124 Stat. 1376
2010.
4 15 U.S.C. 1601 et seq.
5 Dodd-Frank Act sections 141112, 1414, 124
Stat. 1376, 214249; 15 U.S.C. 1639c.
6 15 U.S.C. 1639ca1. TILA section 103 defines residential mortgage loan to mean, with some exceptions including open-end credit plans, any consumer credit transaction that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling or on residential real property that includes a dwelling.
15 U.S.C. 1602dd5. TILA section 129C also exempts certain residential mortgage loans from the ATR requirements. See, e.g., 15 U.S.C. 1639ca8
exempting reverse mortgages and temporary or bridge loans with a term of 12 months or less.
7 15 U.S.C. 1639ca3.
8 15 U.S.C. 1639cb1.

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