The Qualified Mortgage (QM) rule was implemented in January of 2014. It is the one of several rules originated from the Dodd– Frank Wall Street Reform and Consumer Protection Act that will impact the housing market. This law is intended to protect consumers by boosting underwriting standards, but some have argued that the rules will raise costs and minimize access for consumers. To gain insight on the impact of the brand new law, NAR Research surveyed a sample of lenders with concerns about the impact of the lending on their business and how the rule could consequently effect consumers.
When questioned the degree of the QM rule’s impact, 55 % of survey respondents indicated that the QM rule would impact 2.6 % to 20 % of their originations. However, 20 % of originators surveyed indicated that the modifications and heightened underwriting generally would affect nearly all of their production.
What does this change mean for REALTORs and consumers? Consumers should expect to supply additional documentation to support their income, employment and assets. If a buyer has a substantial debt-to-income ratio, the FHA in addition to Fannie Mae and Freddie Mac will be more lenient than private lenders. On the other hand, if your client falls into the other areas of the non-QM space or even the rebuttable presumption portion of the QM space (e.g. high fees, subprime, interest only, etc.) buyers might need help finding a specialty lender.
If in the California region, always feel free in contacting Ron Henderson as we have access to QM, non-QM lenders and rates and terms are always competitive.