Preparing for QM, and More
December 10, 2013 3:43 PM
New Year's Regulations
Lenders are double-checking their readiness for new mortgage rules arriving on Jan. 10, which will lead to new compliance concerns but also offer new protection from liabilities. Image: Fotolia
On ability to repay requirements:
While there might be a short grace period while everybody gets used to the new world order, there are consequences and risks for noncompliance. Even honest miscalculations may be enough to land you in hot water.-Mark Fogarty, editorial director, Mortgage Publications Group, SourceMedia
On the increase in underwriting risks:
Underwriters since the beginning of time have been told they should use their best judgment in evaluating a loan file. Now there is significant risk where an underwriter uses that judgmental authority.-Julie Manson, SVP, Risk Management, Plaza Home Mortgage Inc.
On what QM hurdle would be toughest for recent loans to meet:
What we found is that fees by far were the biggest barrier. More than half of the loans that would be kicked out of safe harbor were over the 3% threshold.-Jason Roth, co-founder and SVP, product development and engineering, ComplianceEase
On the 43% debt-to-income limit for some QM loans and the government-sponsored enterprise exemption:
Less than 20% of the loans made in 2012 had DTIs that exceeded 43%. We suspect much of this is in the GSEs books since they do go above 43%, technically, in their underwriting. Therefore they would qualify for QM as long as the GSEs are exempted.-Faith Schwartz, SVP, government solutions, CoreLogicPhoto: Bloomberg News
On how the 43% DTI limit for QM will affect originators:
"We are finding, more and more, that many originators are going to cap DTI at a number below 43% so that they have a little bit of wiggle room."-Scott D. Samlin, partner, Alston & Bird LLP
