A recent email I received from Jimmy Darland, a mortgage broker. Not pretty, people. Folks to make you aware you may see some of your deals fail after January 21st next year because of the Qualified Mortgage rule that has been issued by the Consumer Financial Protection Bureau (CFPB), a regulatory agency created by the Dodd/Frank bill passed by Congress to correct problems created by the financial impact of the housing market during 2006-2008. Expect more overlays by lenders to assure the loan is a Qualified Mortgage. To be a qualified mortgage it must meet certain guidelines: DTI not to exceed 43% No negative amortization Must meet ability to pay, lender must verify No interest only Max 30 year term Max fees of 3% of loan amount, exception for under 110K loan, (anything over 3% is considered a high cost loan) 20% down payment (some in congress trying to get this raise to 25%) Adjustable rate loan must qualify at the max adjusted rate. No balloon payments Guide lines may change as they implement. At the present time FHA loans will not meet the QM rule due to the increase in mortgage insurance to be paid over the life of the loan. At present there is a delay in implementing this for one year on these loans, but that could change. This doesn’t mean that no loans will be made that do not meet the guidelines but any that are will be more expensive for the consumer and some lenders will not make them. The CFPB is under the Federal Reserve with no oversight by Congress, and can do most anything they wish; they are the rule maker, policeman, judge and executor with people that have no or little knowledge of the mortgage industry - kind of like someone teaching you how to cook but who doesn’t know how to turn the stove on. The last three years have been going after the mortgage industry, but as I heard one congressman say, After we get the mortgage industry in line, we will have to do something about the gross fees the real estate agents charge to protect the consumer. Jimmie Darland NMLS # 226785 Lic in Texas The Mortgage Guy
Posted on: Tue, 12 Nov 2013 19:07:46 +0000
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