Starting January 10th, 2014 the new Qualified Mortgage rules will go into effect. Since the mortgage meltdown started in 2008ish the government has basically been trying to eliminate risky mortgages as well as stop lenders from charging borrowers excess fees. The new Qualified Mortgage and Ability to Pay rules are just another extension of what the government has previously put in place. Here is what is says;
The Consumer Financial Protection Bureau (CFPB) issued a final rule to implement laws requiring mortgage lenders to consider consumers’ ability to repay home loans before extending them credit. Effective January 10, 2014 the Ability-to-Repay (ATR) and Qualified Mortgage (QM) final rule will require creditors to make a reasonable, good faith determination of a consumer’s ability to repay any consumer credit transaction secured by a dwelling and establishes certain protections from liability under
this requirement for “qualified mortgages.”
But guess what? WE ARE ALREADY DOING ALL THIS! These rules were put into place to stop sub-prime mortgages and predatory lending. But I don’t know of anyone doing these loans now anyway. Over 90% of the current loans being done now are ‘agency loans’. That would be Fannie Mae, Freddie Mac, FHA, VA, and RD. Currently these loans have to be approved through the agency’s automated underwriting system. All these loans fall under the Qualified Mortgage rule. So, for 90% of the mortgages after January 10th, 2014 nothing changes.
What about the other 10%? Well, most of these would be jumbo and a few other types of non-agency loans. But these loans are currently being underwritten with greater scrutiny than the new Qualified Mortgage rules. So, in my opinion, the new Qualified Mortgage rules will have little to no impact on the housing market.
The last part of the Qualified Mortgage rule has to do with lenders charging excess fees. The CFPB, starting January 10th, has set the limit at 3%. I see this as a non-factor. Most mortgage brokers do not come close to making 3% on a mortgage and mortgage bankers do not have to disclose their compensation, so the 3% will obviously not come into play.