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Federal Register / Vol. 86, No. 42 / Friday, March 5, 2021 / Proposed Rules
programs would be implemented while the GSEs are under the conservatorship of FHFA.
The Bureau preliminarily concludes that extending the mandatory compliance date of the General QM
Final Rule to October 1, 2022 will benefit consumers by providing additional access to responsible, affordable mortgage credit and flexibility for the GSEs to create and modify programs to address emerging consumer needs. However, the Bureau also recognizes that the anticipated effects of this proposal may be affected by policies, agreements, or legislation created by parties other than the Bureau.
For example, the Preferred Stock Purchase Agreements PSPAs for Fannie Mae and Freddie Mac or restrictions of FHFA, as regulator and conservator of the GSEs, may restrict the GSEs from purchasing loans with certain attributes or characteristics.82 To the extent that other factors prevent the GSEs from using the additional flexibilities provided by the extension of the mandatory compliance date and the Temporary GSE QM loan definition, the impacts of this proposed rule may be smaller than they otherwise would be.
Nonetheless, the Bureau is issuing this proposal because it is concerned that mandating that creditors comply with the revised General QM loan definition on July 1, 2021 could limit options for consumers struggling due to the disruptive effects of the pandemic, and because the Bureau is unable to predict how such agreements or restrictions might change in the future. Accordingly, the Bureau has preliminarily concluded that the benefits of continued access to credit for consumers during the pandemic warrant the additional flexibility provided to creditors through this proposed rule.

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82 On January 14, 2021, the U.S. Department of the Treasury and the FHFA amended the terms of the PSPAs for Fannie Mae and Freddie Mac.
Section 5.14c was added to the agreement and limits the GSEs acquisition of certain loans on or after July 1, 2021, including loans that are not qualified mortgages as defined by 12 CFR
1026.43e2, 5, 6, 7 or f with certain exceptions.

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As noted above, in the Patch Extension Final Rule and the General QM Final Rule, the Bureau declined to extend the Temporary GSE QM loan definition beyond the July 1, 2021
mandatory compliance date of the amendments to the General QM loan definition. The Bureau raised concerns about potential harms from leaving the Temporary GSE QM loan definition in place longer than necessary, including stifling innovation and the development of competitive private-sector approaches to underwriting. The Bureau also stated that, as long as the Temporary GSE QM
loan definition continued to be in effect, the non-GSE private market was less likely to rebound and that the existence of the Temporary GSE QM loan definition may have been limiting the development of the non-GSE private market. For these reasons, the Bureau concluded that it was appropriate for the Temporary GSE QM loan definition to remain in place no longer than the date creditors are required to transition from the then-current General QM loan definition to the revised General QM
loan definition.83 The Bureau concluded that the mandatory compliance date, and the expiration of Temporary GSE QM loan definition should occur on July 1, 2021. However, the Bureau now preliminarily concludes that the need to provide maximum flexibility to address the effects of the pandemic outweighs any, likely minor, inhibiting effect that extension of the Temporary GSE QM loan definition could have on new access to credit resulting from new private sector underwriting approaches or a rebound of the non-GSE private market during the same period. Moreover, market participants looking to adopt innovative underwriting approaches or expand the non-GSE market would have the option to use the price-based General QM loan 83 85 FR 67938, 67951 Oct. 26, 2020. Several commenters on the General QM Proposal also requested that the Bureau adopt an overlap period.
The Bureau declined to adopt an overlap period in the General QM Final Rule for the same reasons it declined to adopt an overlap period in the Patch Extension Final Rule. 85 FR 86308, 86385 Dec. 29, 2020.

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definition even if the mandatory compliance period were delayed until October 1, 2022. Accordingly, the Bureau preliminarily concludes that leaving the Temporary GSE QM loan definition in place until October 1, 2022
may be appropriate.
Concerns regarding access to mortgage credit for consumers. The Bureau is also proposing to extend the mandatory compliance date of the General QM Final Rule to avoid a reduction in credit access for certain consumers who have been unable to purchase or refinance due to the effects of the pandemic on the origination market. As described further below, the Bureau is concerned that despite the record origination volumes, access to low interest-rate refinances and purchase mortgages in these unique circumstances may be less widely available for consumers with weaker credit relative to consumers with stronger credit. The Bureau is concerned that requiring creditors to transition to the price-based General QM loan definition on July 1, 2021 and eliminating the Temporary GSE QM
loan definition and the DTI-based General QM loan definition at that time could exacerbate these credit access concerns.
As illustrated in Figure 3, first-lien mortgage originations exceeded $4
trillion in 2020, surpassing the prior record of $3.725 trillion set in 2003,84
and originators have faced significant capacity and resource constraints given strong refinance demand. In addition, the Board has undertaken extraordinary interventions to purchase agency MBS
in large quantities since March of 2020, which has exerted downward pressure on MBS yields and thus increased liquidity for creditors who rely on the ability to sell GSE and government loans in the secondary markets.85
84 Inside Mortg. Fin., One for the Ages: Home Lenders Set New Production Record of $4T-Plus Jan. 27, 2021 https
www.insidemortgagefinance.com/articles/220379one-for-the-ages-home-lenders-set-new-productionrecord-of-4t-plus on file.
85 Housing Finance at a Glance, supra note 36.

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