The Consumer Financial Protection Bureau today proposed to create a new category of “seasoned” qualified mortgages. This designation would apply to portfolio loans that have met certain performance requirements over a 36-month seasoning period, including having no more than two delinquencies of 30 or more days and no delinquencies of 60 or more days.
Additionally, to receive seasoned QM status, loans must be secured by a first lien; have a fixed rate with fully amortizing payments and no balloon payments; must not exceed 30 years; and total points and fees must not exceed specified limits. Creditors would also need to consider the borrower’s debt-to-income ratio or residual income and verify their obligations and income. The proposal would not specify a DTI limit, nor require creditors to use appendix Q to Regulation Z in calculating and verifying debt and income.
The bureau proposed that this new rule take effect on the same date as a separate final rule amending the general QM definition that is currently out for public comment. Comments on today’s proposal will be due 30 days after publication in the Federal Register.