New “QM” (Qualifed Mortgage) Rules Coming In 2014
Come January 10th 2014 there will be many new rules in place. The rule buzzing around the industry right now is “QM”-(Qualified Mortgage). The new rules were written by the Consumer Financial Protection Bureau to provide additional protection to home buyers from risky mortgages. Many of these risky loans are already extinct…IE negative amortization, no doc loans, pre-payment penalties, interest only ARM’s, etc.
The new rules are intended to create stricter measurements of your “ability to repay” the mortgage. Banks will continue to
look at items like income, assets, employment history, debt to income, credit history, etc however they will be sharpening
their pencils when evaluating these items.
Right now we don’t have concrete answers to what changes are coming. Banks will continue to have legal teams analyze the law(s) and act accordingly. The assumption is that many banks will toughen lending practices. Recall that Fannie/Freddie release guidelines as to what they will buy/sell in secondary markets however the banks can run “overlays” on top of these guidelines. A good example of this is the 10 property rule. Fannie allows someone to own up to 10 properties. However most banks will not accommodate this. Most banks will only allow 4 total properties. The banks don’t want the risk even though Fannie is saying they will allow the loan to go through.
As we get more information and the rules and fallout become more clear we will pass information along. Right now the general consensus is plan on having more paperwork and tougher underwriting when purchasing or refinancing a home in 2014.
Max A Kallos
404-277-5884 phone
678-298-8947 fax
mkallos@mylhm.com
Recognized in ‘Atlanta’ Magazine as a Five Star Mortgage Professional
Endorsed by Emmy winning consumer advocate Dale Cardwell!
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