MPF Program Updates for Revised Qualified Mortgage Rule
Effective Date: July 1, 2021
The MPF Program is providing some updates on implementation and compliance dates regarding the Revised Qualified Mortgage (“QM”) rule. The requirement that only Qualified Mortgage (QM) loans that meet all of the General QM “safe harbor” requirements under Truth in Lending Act and Regulation Z, or government loans that meet the applicable government agency’s QM requirements, are eligible for sale to the MPF Program, will not be changing. It will continue to be the PFI’s responsibility to ensure compliance with the Revised QM Rule.
To be eligible for purchase, loans that do not meet the Revised QM Rule Loans but comply with the current QM requirements, must:
- have application dates on or before June 30, 2021, and
- be delivered on or before August 30, 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 30, 2021.
MPF Traditional Conventional Loans
Effective for MPF Traditional Conventional Mortgage Loans with Application Dates on or after July 1, 2021: the MPF Program will only accept mortgage loans that comply with the Revised QM Rule published on December 20, 2020. All loans will be required to comply with the APR to average prime offer rate (APOR) spread as required by the Revised QM Rule for QM “safe harbor,” which, for first liens, must be a spread of less than 1.5 percentage points for a comparable transaction as of the date the interest rate is set.
PFIs will continue to be required to abide by applicable laws and the product specific MPF Guides when considering the borrower’s current or reasonably expected income or assets (other than the value of the dwelling that secures the loan and any real property attached to that dwelling), debt obligations, alimony, child support, and DTI ratio or residual income. At this time, the MPF Program does not anticipate making any substantive changes to the applicable Guides requirements, including the current requirement that manually underwritten loans not exceed a maximum 43% DTI.
In addition, PFIs will be permitted to continue utilizing DU and LPA automated underwriting systems (“AUS”) for MPF Traditional Conventional loans. Loans will have to meet all the QM safe harbor requirements including the applicable APR to average prime offer rate (APOR) spread, and MPF Guide requirements. At this time, the MPF Program does not anticipate making any changes to the current applicable MPF Guides overlays.
For manually underwritten MPF Traditional Conventional loans, PFIs will be required to validate the borrower’s current or reasonably expected income or assets (other than the value of the dwelling that secures the loan and any real property attached to that dwelling), debt obligations, alimony, child support, and DTI ratio or residual income pursuant to the applicable validation requirements outlined in Fannie Mae Single Family Selling Guide Sections B3-3 through B3-6 (published June 3, 2020, and as later revised), as provided for in Regulation Z.
MPF Xtra Loans
Effective for MPF Xtra Mortgage Loans with Application Dates on or after July 1, 2021: as previously announced (MPF Announcement 2021-35), the MPF Program will only accept mortgage loans that comply with the product specific MPF Guides and the Fannie Mae selling guide and requirements.
MPF Traditional Government Loans and MPF Government MBS Loans:
Mortgage Loans delivered under MPF Traditional Government and MPF Government MBS products will continue to be eligible as long as they meet the applicable Government Agency’s QM requirements and MPF Program product specific requirements.
Additional policy and implementation details as well as updated MPF Guides will be provided in a future communication.
- MPF Announcement 2021-41