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Federal Register / Vol. 86, No. 42 / Friday, March 5, 2021 / Proposed Rules
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loan definition for a longer period of time.75
Reasons for the Proposed Extension of the Mandatory Compliance Date The Bureau is issuing this proposal because it has preliminarily concluded that maintaining the July 1, 2021
mandatory compliance date may leave some struggling homeowners with fewer options by reducing the flexibility of creditors to respond to the effects of the pandemic. In the Patch Extension Final Rule and the General QM Final Rule, the Bureau noted the disruptive effects of the pandemic on the mortgage market but nevertheless concluded that these effects did not justify delaying the requirement to comply with the revised General QM loan definition on July 1, 2021. Upon further evaluation, the Bureau is concerned that it may not have given sufficient weight to the potential risk that mandating the transition to the price-based approach in the revised General QM loan definition on July 1, 2021 could restrict options for consumers struggling with the disruptive effects of the pandemic. The Bureau preliminarily concludes that maximizing flexibility to respond to the effects of the pandemic, by delaying the mandatory compliance date until October 1, 2022, outweighs concerns that an extension of the mandatory compliance date could stifle the development of private-sector approaches to underwriting or a rebound of the non-GSE private market in the near term.
The Bureau also believes that the adverse impact of the pandemic on mortgage markets may persist longer than anticipated at the time of publication of the General QM Final Rule. In particular, as discussed in more detail below, with the extension of certain forbearance programs and foreclosure moratoriums, the Bureau believes that the potential for disruption in the mortgage market will persist well past July 2021.
The Bureau notes that this rulemaking does not reconsider the merits of the price-based approach adopted in the General QM Final Rule. The revised General QM loan definition went into effect on March 1, 2021, and creditors have the option of using that definition to originate QMs. Rather, this proposal addresses the narrower question of whether it would be appropriate in light of the continuing disruptive effects of the pandemic to help facilitate greater creditor flexibility and expanded availability of responsible, affordable credit options for some struggling 75 85

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consumers by allowing creditors to continue making QMs under the DTIbased General QM loan definition and under the Temporary GSE QM loan definition until October 1, 2022.
The Bureau is concerned that requiring creditors seeking to make QM
loans to shift to the price-based General QM loan definition and limiting their ability to rely on the Temporary GSE
QM loan definition and on the DTIbased General QM loan definition on July 1, 2021 could reduce access to credit, particularly for certain consumer segments. The Bureau has two separate concerns related to access to responsible, affordable mortgage credit, as detailed further below. First, the Bureau believes that ongoing regulatory interventions to assist consumers who may have suffered an income disruption related to the pandemicsuch as COVID19 forbearance plans and foreclosure moratoriumsand potential disruptions in the market when those interventions expire may warrant an extension of the mandatory compliance date. Second, the Bureau has concerns about mortgage credit availability for some creditworthy consumers who would qualify for a mortgage but for the disruptive market effects of the pandemic, and such concerns may warrant an extension of the mandatory compliance date.
Impact of foreclosure moratoriums and the expiration of COVID19
forbearance plans. The Bureau is issuing this proposal because it is concerned that the impact of the eventual expiration of foreclosure moratoriums and COVID19 forbearance plans described in part II.D above has the potential to lead to additional disruptions in the mortgage markets. In particular, the Bureau is concerned that such expirations may create the potential for heightened delinquencies and foreclosures for consumers who continue to suffer disruptions in their income due to the COVID19 pandemic.
The Bureau is concerned that, while many consumers currently in forbearance plans can be assisted through payment deferrals and loan modifications, there will be some consumers who will be unable to either resume their mortgage payment or sustain a modified loan payment and will be forced to either sell their homes or be placed into foreclosure after the expiration of the foreclosure moratoriums. The Bureau is concerned that it may not have given sufficient weight to these issues in mandating that creditors comply with the price-based approach on July 1, 2021. In addition, the Bureau believes that the extension of certain forbearance programs and
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foreclosure moratoriums may result in these effects continuing longer than the Bureau anticipated at the time of the General QM Final Rule.
The Bureau preliminarily concludes that extending the mandatory compliance date of the General QM
Final Rule to October 1, 2022 will provide additional flexibility to creditors originating QM loans.
Specifically, creditors would be permitted to originate General QM loans under the price-based General QM loan definition that took effect on March 1, 2021, and would also be allowed to originate General QM loans in accordance with the DTI-based General QM loan definition that was in effect prior to March 1, 2021, as well as Temporary GSE QM loans, for an additional 15 months. As discussed in further detail in this section, the Bureau is issuing this proposal because providing such flexibility may benefit struggling consumers who are forced to sell their property to avoid foreclosure by helping to ensure that potential purchasers continue to have access to mortgage credit. The following section entitled Concerns regarding access to mortgage credit for consumers describes the Bureaus concerns that despite record origination volume, access to credit has remained relatively tight for consumers with weaker credit.
Moreover, this proposal may also provide some consumers with additional opportunities to refinance into historically low interest rates.
The Bureau is concerned that the potential impact of the COVID19
pandemic on the mortgage market may continue for longer than anticipated at the time the Bureau issued the General QM Final Rule, and so could warrant additional flexibility in the QM market to ensure creditors are able to accommodate struggling consumers.
Specifically, as discussed in part II.D, the expiration dates for the foreclosure moratoriums and enrollment dates for the COVID19 forbearance plans have been extended for loans guaranteed or insured by the GSEs, FHA, VA, and USDA since the publication of the Patch Extension Final Rule and the General QM Final Rule. Both the GSEs and the government agencies have also lengthened the permissible forbearance period from the 12 months mandated in the CARES Act to up to 18 months for certain loans. Under these revised timelines, most COVID19 forbearance plans will expire no later than June 30, 2022.
The Bureau is concerned that the combined impact of the expiration of the foreclosure moratoriums and the expiration of the COVID19 forbearance
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