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41 home originations stemmed from the GSE Patch, amounting to approximately $260 billion worth of loans. at percentage of originations would likely be much higher, but the CFPB legislation surrounding the QM GSE Patch has, thus far, kept private lenders from providing qualified mortgages to these individuals. However, if this pool of borrowers isn't particularly risky, why then are private lenders being prohibited from granting them qualified mortgages? The answer to this question does not seem to be particularly clear, unless one posits that Congress just got it wrong. While DTI can certainly be a useful statistic, it by no means should be the seminal one when determining which borrowers should or should not receive a mortgage. Readily available data, such as a FICO score or simple loan-to-value ratio (LTV ) have been shown to be much more effective predictors of default. Frankly speaking, DTI caps are just plain unnecessary. is unresolved issue is reaching a level of urgency with the GSE Patch set to expire on January 1, 2021. is large segment of borrowers, undeservedly stigmatized, will have even fewer options should the Patch expire with no changes to the DTI requirements. ough borrowers would be able to qualify for mortgages with FHA, VA, and USDA, a large portion would be forced to explore the non-QM space. is would require lenders in turn to expand a space structured for a smaller pool of non-W2 borrowers into one able to accommodate an increase of literally one-sixth of the number total originations. is expansion would be a boon to private mortgage lenders, to be sure, but an expansion with unnecessary growing pains. A much simpler solution would be to modify Appendix Q to significantly raise, or drop altogether, the DTI Cap. As it stands, Appendix Q—which sets the standards for determining debt and income for potential borrowers—contains requirements for employment history verification, income stability, and qualifiers on nonstandard full- time employment. ese standards could be left fully intact and used to calculate DTI for a higher ratio, such as 50%, with little else needed to maintain effective regulation. Based on the statistics from 2018, this would account for over 300,000 additional borrowers having access to private QM lending, who otherwise would be dependent on GSEs or non-QM. e bottom line is that a large pool of high-quality borrowers with a low rate of default exists, and private lenders are willing to lend to them, but the government is standing in the way. e expiration of the GSE Patch is a step in the right direction, but a step that will leave everyone off balance if it is not also accompanied by changes to Appendix Q. It would behoove everyone if Congress stopped extending deadlines and started revisiting DTI, so that an orderly transition can be made on January 2021 with a solution that benefits all parties. Paul S. Huntington, Esq. Attorney Client Manager at Richard M. Squire & Associates, Paul S. Huntington, Esq. has been practicing law in the area of creditors' rights for seven years, with a focus on compliance, litigation, and bankruptcy. 1 Urban Institute; What, IF Anything, Should Replace the QM GSE Patch; August 2018 2 Id 3 Pete Carroll; Expiration of the CFPB's Qualified Mortgage "GSE Patch"; Corelogic; July 11, 2019 4 Urban Institute; What, Comment Letter to the Consumer Financial Protection Bureau on the Qualified Mortgage Rule; September 2019 A large pool of high- quality borrowers with a low rate of default exists, and private lenders are willing to lend to them, but the government is standing in the way.