The QRM was envisioned as the gold standard mortgage, a high quality, low-risk mortgage stamp of approval. Those are two very different goals, and ensuring access to the latter completely turns the so-called consumer protection goal of the Dodd-Frank Act on its head.įor those that have forgotten, the Dodd-Frank Act supposedly guarded against a repeat of the 2008 housing fiasco by creating two specially designated mortgages: The Qualified Residential Mortgage (QRM) and the Qualified Mortgage (QM). More broadly, the bureau is now mixing up the goal of ensuring fair and equitable access to credit with the goal of ensuring access to low-priced QM loans. (And evidence does show that DTI is highly correlated with risk.)
NEW QM RULES 2021 PATCH
The bureau is complying, and they are using the term “access to credit” as the fig leaf.Īccording to the proposal, “The Bureau estimates that, after the Patch expires, many of these loans would either not be made or would be made but at a higher price.” There are several problems here.įirst, if these loans would not qualify as a result of the DTI limit that the Bureau set in the first place, then there is good reason to doubt the bureau’s ability to set a meaningful risk limit for QM loans now. They want as expansive a definition as possible so that lenders will be able to write more loans with the QM safe harbor.
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