New Year's Regulations New Year's Regulations

Lenders are double-checking their readiness for new mortgage rules arriving on Jan. 10, which will lead to new compliance concerns but also offer new protection from liabilities. Image: Fotolia

On ability to repay requirements: On ability to repay requirements:

“While there might be a short grace period while everybody gets used to the new world order, there are consequences and risks for noncompliance. Even honest miscalculations may be enough to land you in hot water.” - Mark Fogarty, editorial director, Mortgage Publications Group, SourceMedia

On the increase in underwriting risks: On the increase in underwriting risks:

“Underwriters since the beginning of time have been told they should use their best judgment in evaluating a loan file. Now there is significant risk where an underwriter uses that judgmental authority.” - Julie Manson, SVP, Risk Management, Plaza Home Mortgage Inc.

On what QM hurdle would be toughest for recent loans to meet: On what QM hurdle would be toughest for recent loans to meet:

“What we found is that fees by far were the biggest barrier. More than half of the loans that would be kicked out of safe harbor were over the 3% threshold.” - Jason Roth, co-founder and SVP, product development and engineering, ComplianceEase

On the 43% debt-to-income limit for some QM loans and the government-sponsored enterprise exemption: On the 43% debt-to-income limit for some QM loans and the government-sponsored enterprise exemption:

“Less than 20% of the loans made in 2012 had DTIs that exceeded 43%. We suspect much of this is in the GSEs’ books since they do go above 43%, technically, in their underwriting. Therefore they would qualify for QM as long as the GSEs are exempted.” - Faith Schwartz, SVP, government solutions, CoreLogic Photo: Bloomberg News

On how the 43% DTI limit for QM will affect originators: On how the 43% DTI limit for QM will affect originators:

"We are finding, more and more, that many originators are going to cap DTI at a number below 43% so that they have a little bit of wiggle room." - Scott D. Samlin, partner, Alston & Bird LLP

Preparing for QM, and More
New ability to repay/qualified mortgage rules and other regulations going into effect next year will present additional risks for the industry. Excerpts from a recent NMN/American Banker/PaymentsSource webinar highlight some key ones.
Comments (0)
Be the first to comment on this post using the section below.
You must be registered to post a comment.
Not Registered?
You must be registered to post a comment. Click here to register.
Already registered? Log in here
Please note you must now log in with your email address and password.

 

Already a subscriber? Log in here
Please note you must now log in with your email address and password.