CFPB's New Seasoning Rule is Already Showing Promise

Posted To: MND NewsWire

The Urban Institute (UI) has looked at a final mortgage rule issued by the Consumer Financial Protection Bureau (CFPB) in late 2020 which would provide a 3-year pathway to safe harbor for loans that are a rebuttable presumption or nonqualified mortgage at origination. The study, by UI analysts Karan Kaul, Laurie Goodman, and Jun Zhu found that loan performance during the first three years of the mortgage term is a better predictor of subsequent loan performance than the rate spread. The rule requires that both rebuttable presumption and nonqualified conventional first-lien mortgages can be deemed safe harbor 36 months after origination if they are held on the originator’s balance sheet. They may also be sold once and then held as a whole loan on the buyer’s balance sheet for the entire three…(read more)

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CFPB's New Seasoning Rule is Already Showing Promise
CFPB's New Seasoning Rule is Already Showing Promise

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