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Federal Register / Vol. 86, No. 42 / Friday, March 5, 2021 / Proposed Rules The total points and fees generally do not exceed 3 percent of the loan amount;
The income and assets relied upon for repayment are verified and documented;
The underwriting uses a monthly payment based on the maximum rate during the first five years, uses a payment schedule that fully amortizes the loan over the loan term, and takes into account all mortgage-related obligations; and The loan complies with any guidelines or regulations established by the Bureau relating to the ratio of total monthly debt to monthly income or alternative measures of ability to pay regular expenses after payment of total monthly debt.9
In January 2013, the Bureau issued a final rule amending Regulation Z to implement TILAs ATR requirements January 2013 Final Rule.10 The January 2013 Final Rule became effective on January 10, 2014. This proposal refers to the January 2013 Final Rule and later amendments 11 to it collectively as the ATR/QM Rule or the Rule. The ATR/QM Rule implements the statutory ATR provisions discussed above and defines several categories of QMs, two of which are discussed below.12
One category of QMs defined by the ATR/QM Rule consists of General QMs.
The January 2013 Final Rule provided that a loan was a General QM if:
The loan does not have negativeamortization, interest-only, or balloonpayment features, a term that exceeds 30
years, or points and fees that exceed specified limits; 13
The creditor underwrites the loan based on a fully amortizing schedule
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9 15

U.S.C. 1639cb2A.
10 78 FR 6408 Jan. 30, 2013.
11 As discussed in part II.C below, the Bureau made several amendments to the ATR/QM Rule in 2020. Prior to 2020, the Bureau made several other amendments to the ATR/QM Rule. See 78 FR 35429
June 12, 2013; 78 FR 44686 July 24, 2013; 78 FR
60382 Oct. 1, 2013; 79 FR 65300 Nov. 3, 2014;
80 FR 59944 Oct. 2, 2015; 81 FR 16074 Mar. 25, 2016; 85 FR 67938 Oct. 26, 2020.
12 12 CFR 1026.43c, e. The ATR/QM Rule created several additional categories of QMs. The first additional category consisted of mortgages eligible to be insured or guaranteed as applicable by HUD FHA loans, the U.S. Department of Veterans Affairs VA loans, the U.S. Department of Agriculture USDA loans, and the Rural Housing Service RHS loans. 12 CFR 1026.43e4iiB
through E, as was in effect on February 26, 2021.
This temporary category of QMs no longer exists because the relevant Federal agencies have since issued their own QM rules. See, e.g., 24 CFR 203.19
HUD rule. Other categories of QMs provide more flexible standards for certain loans originated by certain small creditors. 12 CFR 1026.43e5, f; cf.
12 CFR 1026.43e6 applicable only to covered transactions for which the application was received before Apr. 1, 2016.
13 12 CFR 1026.43e2i through iii.

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using the maximum rate permitted during the first five years; 14
The creditor considers and verifies the consumers income and debt obligations in accordance with appendix Q; 15 and The consumers DTI ratio is no more than 43 percent, determined in accordance with appendix Q.16
Appendix Q contained standards for calculating and verifying debt and income for purposes of determining whether a mortgage satisfies the 43
percent DTI limit for General QMs. The standards in appendix Q were adapted from guidelines maintained by Federal Housing Administration FHA when the January 2013 Final Rule was issued.17
A second category of QMs defined by the January 2013 Final Rule, Temporary GSE QMs, consisted of mortgages that 1 comply with the ATR/QM Rules prohibitions on certain loan features and its limitations on points and fees 18
and 2 are eligible to be purchased or guaranteed by either GSE while under the conservatorship of the FHFA.19
Unlike for General QMs, the January 2013 Final Rule did not prescribe a DTI
limit for Temporary GSE QMs nor did it require use of appendix Q to verify and calculate debt, income, and DTI
ratios. The January 2013 Final Rule provided that the Temporary GSE QM
loan definition would expire with respect to each GSE when that GSE
ceases to operate under conservatorship or on January 10, 2021, whichever occurred first.20 As discussed further below in part II.C.1, the Bureau issued a final rule in October 2020 extending the expiration of the Temporary GSE
QM loan definition.21
B. The Bureaus Assessment of the ATR/
QM Rule, Requests for Information, and the ANPR
Section 1022d of the Dodd-Frank Act requires the Bureau to assess each of its significant rules and orders and to publish a report of each assessment within five years of the effective date of 14 12

CFR 1026.43e2iv.
CFR 1026.43e2v, as was in effect on February 26, 2021.
16 12 CFR 1026.43e2vi, as was in effect on February 26, 2021.
17 78 FR 6408, 652728 Jan. 30, 2013 noting that appendix Q incorporates, with certain modifications, the definitions and standards in HUD Handbook 4155.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Unit Mortgage Loans.
18 12 CFR 1026.43e2i through iii.
19 12 CFR 1026.43e4, as was in effect on February 26, 2021.
20 12 CFR 1026.43e4iiA and 1026.43e4iiiB, as was in effect on February 26, 2021.
21 85 FR 67938 Oct. 26, 2020.
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the rule or order.22 In January 2019, the Bureau published its ATR/QM Rule Assessment Report.23 During the period leading up to and following the issuance of the Assessment Report, the Bureau solicited and received substantial public and stakeholder input on issues related to the ATR/QM Rule.24
On July 25, 2019, the Bureau issued an advance notice of proposed rulemaking regarding the ATR/QM Rule ANPR. The ANPR stated the Bureaus tentative plans to allow the Temporary GSE QM loan definition to expire in January 2021 or after a short extension.
The Bureau also stated that it was considering whether to propose revisions to the General QM loan definition in light of the potential expiration of the Temporary GSE QM
loan definition and requested comments on several topics related to the General QM loan definition.25
C. The Bureaus 2020 QM Final Rules In 2020, the Bureau issued three final rules related to the ATR/QM Rule: The Patch Extension Final Rule, the General QM Final Rule, and the Seasoned QM
Final Rule. These final rules are discussed below.
1. The Patch Extension Final Rule The Bureau issued the Patch Extension Final Rule on October 20, 2020. It was published in the Federal Register on October 26, 2020.26 The Patch Extension Final Rule amended Regulation Z to replace the January 10, 2021 sunset date of the Temporary GSE
QM loan definition with a provision 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 final amendments to the General QM loan definition in Regulation Z. The Patch Extension Final Rule did not amend the clause 22 12

U.S.C. 5512d.
generally Bureau of Consumer Fin. Prot., Ability to Repay and Qualified Mortgage Assessment Report Jan. 2019, https
files.consumerfinance.gov/f/documents/cfpb_
ability-to-repay-qualified-mortgage_assessmentreport.pdf Assessment Report.
24 See, e.g., 82 FR 25246 June 1, 2017 request for information in connection with the Bureaus assessment of the ATR/QM Rule; 83 FR 10437
Mar. 9, 2018 request for information on the Bureaus rulemaking process; 83 FR 12286 Mar.
21, 2018 request for information on the Bureaus adopted regulations and new rulemaking authorities; 83 FR 10437 Mar. 9, 2018 request for information on the Bureaus inherited regulations and inherited rulemaking authorities. In response to these requests for information, the Bureau received comments on the ATR/QM Rule from a wide variety of stakeholders.
25 84 FR 37155, 3716062 July 31, 2019.
26 85 FR 67938 Oct. 26, 2020.
23 See
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