Loans Subject to the Qualified Mortgage Rule
Overview
NewRez LLC "NewRez" Approved Correspondent Clients: please note that on April 8, 2021, the GSEs published Fannie Mae LL-2021-09 and Freddie Mac Bulletin 2021-13 announcing changes to loan eligibility requirements due to the Preferred Stock Purchase Agreement (the “PSPA”) and revised General Qualified Mortgage Rule. As such, NewRez will be updating its guidelines.
Background
Fannie Mae and Freddie Mac, through the FHFA as their conservator, entered into a Letter Agreement dated January 14, 2021 (the “PSPA”) with the Department of the Treasury to amend the Amended and Restated Preferred Stock Purchase Agreement. Under the amended PSPA, Fannie Mae and Freddie Mac will no longer be permitted to purchase Qualified Mortgages under the GSE Patch and instead, will be required to comply with the Revised General Qualified Mortgage Rule set forth in §1026.43(e)(2).
All covered transactions will be required to comply with the APR to Average Prime Offer Rate (APOR) spreads as required by the Revised General Qualified Mortgage Rule as outlined below.
Rate threshold:
- For loan amounts greater than or equal to $110,260, the APR cannot exceed the APOR by 2.25% or greater.
- For loan amounts equal to or greater than $66,156 but less than $110,260, the APR cannot exceed the APOR by 3.5% or greater.
- For loan amounts less than $66,156, the APR cannot exceed the APOR by more than 6.5% or greater.
Effective Date
- Loans with Application Dates on and after July 1, 2021 will be required to comply with the Revised General Qualified Mortgage Rule.
- Loans with Application Dates prior to July 1, 2021 that do not comply with Revised General Qualified Mortgage Rule must be delivered and purchased by NewRez no later than July 30, 2021.