CFPB Final Rule Extending GSE Patch

October 20, 2020

On Tuesday, October 20, 2020, the CFPB issued a final rule to extend the Government-Sponsored Enterprise (GSE) Patch until the mandatory compliance date of the final rule amending the General Qualified Mortgage (QM) loan definition in Regulation Z. The GSE Patch was originally schedule to expire January 10, 2021. The Bureau is not amending the provision in Regulation Z stating the GSE Patch will expire if the GSEs (Fannie Mae and Freddie Mac) exit conservatorship.


This action by the Bureau will help to ensure a smooth and orderly transition away from the GSE Patch and will maintain access to responsible, affordable mortgage credit upon expiration. The GSE Patch provides QM status to certain mortgage loans eligible for purchase or guarantee by either of the GSEs. GSE Patch loans are eligible for QM status even if the DTI ratio exceeds 43 percent. Last year, the Bureau released an assessment of the ATR/QM Rule and found that GSE Patch loans represent a large and persistent share of mortgage originations.


The Bureau is currently developing a final rule to amend the General QM loan definition and is planning to issue it at a later date.