Inside Mortgage Finance yesterday reported that the GSEs last year purchased almost $128 billion of non-QM mortgages determined on the CFPB’s ability-to-pay criteria (with still more non-QMS likely depending on how the GSEs deploy CFPB-authorized flexibility on other criteria). In short, a GSE successor not eligible for the CFPB’s QM exemption would have a whole lot of risk-retention to absorb, not to mention a lot of non-trivial legal and reputational risk. The market’s ability to sustain non-QM availability in the absence of the GSEs is thus thoroughly uncertain, belying CFPB assertions that its rules have had no adverse impact on the market – true as far as it goes but in large part due to the GSE exemption alongside the permanent ones afforded the FHA and VA.

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