MPF Xtra Updates to Qualified Mortgage Rule and Loan Eligibility
On April 8, 2021, Fannie Mae published Lender Letter LL-2021-09 providing notice that loans purchased by Fannie Mae with application dates on and after July 1, 2021 must meet the Consumer Financial Protection Bureau’s Revised Qualified Mortgage Rule under the Ability to Repay regulation.
Loans subject to the Qualified Mortgage Rule
The PSPA requires that Fannie Mae acquire loans that meet the revised General Qualified Mortgage (QM) loan definition in the CFPB’s rule that became effective March 1, 2021 (Revised QM Rule).
As a result, and in accordance with the dates below, Fannie Mae will no longer acquire loans that are GSE Patch loans that do not meet the Revised QM Rule. To be eligible for purchase, such loans must:
- have application dates on or before June 30, 2021, and
- be purchased as whole loans on or before August 31, 2021.
In order to meet Fannie Mae’s effective date of August 31, 2021, PFIs are encouraged to work with MPF Service Center to ensure loans that do not meet the Revised QM Rule are delivered to the MPF Program by August 27, 2021.
Additional updates related to the Revised QM Rule
Fannie Mae anticipates additional changes in eligibility and underwriting requirements in the following areas:
- Documentation and verification requirements for loans originated under the high LTV refinance option will be updated in light of the Revised QM Rule.
- All covered loans will be required to comply with the APR to average prime offer rate (APOR) spreads as required by the Revised QM Rule.
Additional policy and implementation details will be provided in a future communication.
Other topics mentioned in the Fannie Mae announcement do not apply to MPF Xtra. To gain a full understanding of these topics, PFIs should review the entire Fannie Mae Lender Letter plus any applicable Fannie Mae Selling Guide chapters, forms, or exhibits noted in the announcement.
- MPF Announcement 2021-35