The Breakdown on Qualified Mortgages
As many of you know, the Consumer Financial Protection Bureau (CFPB) recently announced new rules for how mortgage professionals qualify buyers for home loans. These new rules take effect January 10, 2014, and require lenders to prove a borrower’s ability to repay a loan before extending credit.Here are the 8 factors a lender must review and verify with a 3rdparty before making a loan:
1) Current or reasonably expected income or assets
Qualified mortgages also cannot:
While most mortgages issued today already meet these criteria, the CFPB’s goal in releasing this new regulation on QM was to explicitly define what “ability-to-repay” means and create a “safe harbor” for lenders who extend credit to borrowers who meet these criteria and fail to meet their loan obligations.
If you’d like to read the official summary from the CFPB, read: Summary of the Ability-to-Repay and Qualified Mortgage Rule and the Concurrent Proposal
For full documentation on Qualified Mortgages from the CFPB, visit: Ability to Repay and Qualified Mortgage Standards Under the Truth in Lending Act (Regulation Z)
For more dialogue on QM, check out these articles:
Thank you Pacific Residential Mortgage for this information!