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Lenders Should Know – Amendments to the Qualified Mortgage Rule

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CFPB recently released rules that revamp and expand its standards for what counts as a Qualified Mortgage, swapping out an old debt-to-income limit and introducing a new subcategory of seasoned loans.

Mortgage lenders can opt into the new QM as early as 60 days after the rule is published (so, likely by late February 2021), although compliance becomes mandatory July 1, 2021. Second, the CFPB will begin allowing loans to season into a QM after 36 months of timely payments, so long as the loan is not sold more than once (and is not securitized) during that time.

This rule requires mortgage lenders to make a “reasonable and good faith determination, based on verified and documented information, that the consumer has a reasonable ability to repay before issuing a residential mortgage loan”. Lenders and investors who fail to comply with this requirement can be held liable for damages under the federal Truth-In-Lending Act, presenting borrowers with a defense to foreclosure that dramatically increases both costs and complexity

Federal law and CFPB regulations putting mortgage lenders on the hook for making sure their borrowers can reasonably afford to repay the mortgages. But these determinations can be complicated and challenging, creating headaches and liability risks for lenders.

At PrivoCorp, we help lenders verifying borrower’s eligibility. We perform pre-underwriting quality checks to identify issues in application and borrower documents. We also help you prepare a complete pre-underwriting package by conducting the right reviews and quality checks.

PrivoCorp is an end-to-end mortgage fulfillment company that helps lenders streamline loan processes and gain visibility across the complete loan cycle. Reach out to us at

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