Regulators delay definition, rollout of ‘qualified mortgage’

The Consumer Financial Protection Bureau (CFPR) is delaying publication of its final “qualified mortgage” rule, which will set standards for lenders to ensure borrowers have the ability to repay mortgage loans they’ve been given.

Release of the rule was expected late this summer, but the agency said it’s reopening the process for comment because it wants the public to look at new data that’s pertinent to the proposed “ability to repay” standards.

The new comment period, says CFPB Director Richard Cordray, “gives the public an opportunity to comment on the information we have received.” The new data concerns the performance of Fannie Mae and Freddie Mac loans from 1997 to 2011, as well as other securitized mortgage loans.

As a result of the reopened comment period, publication of the final rule could be set back, possibly until after the national elections later this year. By law, the agency is to release a final rule by January 21, 2013.

When it takes effect, the qualified mortgage rule will apply to all loans. A group of six other federal banking regulators, including the Federal Reserve and U.S. Treasury Department, is working on a companion rule, called the qualified residential mortgage (QRM) rule, which sets standards for whether or not lenders must retain 5 percent of the loan amount for loans that are securitized for sale to investors.