Building on an advance NPR, the Bureau of Consumer Financial Protection is proposing a permanent fix to the definition of a “qualified mortgage” eligible for the QM safe harbor and from a rebuttable presumption of protection from enforcement risk under provisions in the Dodd-Frank Act designed to enhance consumer protection in this critical sector. Moving away from the current focus on debt-to-income (DTI) ratios, the CFPB proposes instead a price-based methodology based on the expectation that higher-priced loans are more likely to be risky from the borrower’s point of view.
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