The CFPB finalized a limited “cure” provision for the Qualified Mortgage rule, allowing a lender that intends to originate a QM but that later finds that points and fees exceeded the 3% cap to refund the excess, plus interest, within 210 days and maintain the legal protections afforded to QMs.
The bureau made several ABA-advocated changes to the final rule. It increased the cure period by 90 days and eliminated the “good faith” requirement, which ABA said injected a subjective element that negates a cure provision’s legal protections. However, the bureau limited creditors’ ability to cure after legal action, a 60-day delinquency or when a borrower identifies a points and fees miscalculation.
The cure provision takes effect upon publication in the Federal Register and will last until Jan. 10, 2021, at which point “creditors should become less reliant on points and fees buffers,” the CFPB said. Other changes finalized apply to Section 501(c)(3) nonprofits that originate and service mortgages.
Read the final rule.