Just 2% of 2012 Loans Fall in Non-QM Box
Lender Processing Services estimates that lenders originated 8.6 million new loans in 2012, up 34% from a year ago.
“Though still a long way off from the historic level of originations that preceded the mortgage crisis, 2012 was the strongest full year of originations we’re seen since 2007,” said LPS senior vice president Herb Blecher.
At least 2% of 2012 loans would be considered non-QM loans under the final qualified mortgage rule that the Consumer Financial Protection Bureau issued on Jan. 10, according to the LPS report, which was released early Thursday morning.
About 84% of last year’s originations were Fannie Mae, Freddie Mac, Federal Housing Administration or other government-backed loans. The CFPB decided that lenders making those federally backed loans should be protected from litigation by the QM rule for up to seven years while the mortgage market returns to some form of normalcy.
So most of the private loans originated last year must have been conservatively underwritten to be considered QM loans.
Back in 2005, approximately 23% of loans would have been considered non-QM loans, the January LPS report says. That’s because the QM definition excludes loans with high fees and interest-only and option ARM features, which were common during the subprime lending era.
The January report shows that delinquencies, foreclosures and foreclosure starts are down year-over-year.
And rising house prices have helped to reduce the number underwater loans to 9.8 million in January from 15.5 million a year also. That is a 35% reduction.
Meanwhile, 2.6 million Fannie and Freddie loans may still be eligible for refinancing via the Home Affordable Refinance Program. “HARP originations are still strong,” LPS said.
Lender Processing Services is based in Jacksonville, Fla.