Leader of Manatt’s Consumer Financial Services practice, Richard Gottlieb, is quoted in American Banker discussing the Consumer Financial Protection Bureau’s recent decision to delay critical amendments to the Qualified Mortgage (QM) rule. QM loans are an important category of residential mortgage loans that receive extra legal protections and are easier to sell into the secondary market. “For QM lenders,” said Gottlieb, “the delay will be problematic without further action.” The reason: Absent changes in their purchase agreements, government-sponsored entities Fannie Mae and Freddie Mac, the so-called “GSE’s, will no longer purchase loans that qualify for the “GSE patch” after July 1, 2021. The GSE “patch” broadly expanded the category of loans eligible for purchase by the GSE’s. Not every loan is sold to the GSE’s. But, while there “remains a strong and rebuilding market for non-agency mortgage-backed securities,” Gottlieb notes, the delay brings uncertainty, and impedes competition in the markets, which ultimately harms both lenders and consumers.
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