An Insider’s Look Into How Secondary Marketing Evaluates LOs

In this webinar we’ll explore the long-term financial impacts of renegotiations, extensions and fallouts, plus basic guidelines to be viewed as a professional by your secondary marketing department

HousingWire Annual Virtual Summit

Sessions from HousingWire Annual 2021 are going to be virtually streamed on October 25. Register now for FREE to tune into what housing industry leaders had to say this year!

How Freddie Mac is addressing affordable housing challenges

Freddie Mac is focused on addressing limited access to credit, housing inequalities, creation and preservation of affordable housing supply and advancement of homeownership education.

A NAR board member tells (almost) all

For this week’s Houses in Motion, a miniseries that is part of HousingWire Daily, we spoke with Lisa Dunn about the pressing issues in real estate, including disclosure of agent commission.

Politics & MoneyMortgage

CFPB director addresses QM myths

Borrowers with DTI above 43% will get mortgage options

The popular assumption that borrowers who fall outside the qualified mortgage definition are essentially blocked from the mortgage finance market is a myth, Consumer Financial Protection Bureau Director Richard Cordray said while speaking in front of the Consumer Federation of America.

During his presentation, Cordray attempted to dispel rumors that the ability-to-repay rule and related QM-standard will disrupt lending to borrowers with debt-to-income ratios above 43%.  

"The rule does not change anything about your current mortgage; it only applies to new mortgages that you apply for on or after January 10, 2014," the director said. "And it does not stop lenders from lending to any borrower with a debt-to-income ratio above 43%; this particular claim is wrong in three ways."

Cordray says lenders can simply rely on the origination standards for loans backed by the government-sponsored enterprises.

Smaller local creditors also are able to issue non-QM loans as long as they hold them within their portfolios. And finally, Cordray said lenders have the ability to issue a non-QM loan by simply using their own judgment after evaluating the borrower’s ability-to-repay and assessing the overall risk.

"Another myth is that this rule restricts down payments; in fact, it says nothing about how much of a down payment you have to make on the house, but leaves that entirely up to you and your lender," Cordray advised.

Still, the residential mortgage-backed securities market remains uncertain about how much risk non-QM loans pose to securitizations.

Moody’s Investors Service released a report, saying litigation risk from non-QM mortgages remains a potential headwind for the private-label RMBS market heading into 2014.
 

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