EverBank will continue to offer interest-only jumbo loans to its affluent customers, despite the litigation risk that comes with originating loans that fall outside the qualified mortgage rule.
“We have been a jumbo lender for a long time,” says EverBank executive vice president Tom Wind. “We will do non-QM loans,” he added.
The Jacksonville, Fla., bank will also make jumbo loans with debt-to-income ratios above 43% through its retail network and hold the non-QM loans in portfolio.
“These loans have performed well,” Wind said during an interview. “We normally deal with very creditworthy borrowers with significant cash flows and deposable income.”
Lenders face increased litigation risk when making interest-only loans and non-GSE loans with DTI ratios above 43% under the QM rule that went into effect Jan. 10.
However, Consumer Financial Protection Bureau director Richard Cordray has repeatedly told lenders that they should not be afraid of making non-QM loans that have performed well historically.
The EVP for consumer and residential lending also noted that EverBank wants to serve borrowers with significant investments who are downsizing their careers and don’t have the income stream they had before.
In those cases, EverBank will look at the amortization of their investments over time as a qualifying source for repayment.
“We have spent a lot time aligning our underwriting guidelines with the (QM) regulatory guidelines on how you calculate DTI,” Wind said.