Brokers Seek Better QM Rule from FHA

The National Association of Mortgage Brokers is trying to convince HUD to loosen its qualified mortgage rule so brokers can continue to originate low-balance FHA-insured loans for their customers.

NAMB is asking the Department of Housing and Urban Development not to count broker compensation towards the 3% points and fees limit in the QM rule.

NAMB president Donald Frommeyer told NMN that he originates a lot of $125,000 FHA-insured loans. But he won’t be able to serve many of his Indiana customers if his company’s compensation is counted toward the 3% limit.

Unless that is removed, “I will only be able to do FHA loans over $170,000 and that is not where my business is,” Frommeyer told NMN. His company is Amtrust Mortgage Funding Inc. in Carmel, Ind.

FHA is currently in the process of the crafting a QM rule that fits its own single-family loan program.

The QM rule issued by the Consumer Financial Protection Bureau limits the points and fees lenders can charge consumers to 3% of the loan amount. In finalizing the QM rule, the CFPB decided to count the compensation a broker receives from the wholesaler toward the 3% limit.

Banks and other mortgage lenders only have to count the compensation they pay their loan officers toward the points and fees limit.

“The impact of the current 3% points and fees cap on smaller loan amounts will have a far greater effect on the FHA market than the general mortgage market addressed by the CFPB final rule,” NAMB says in a comment letter.

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