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CFPB / RegulatoryMortgage

Former CFPB official: No special QM loophole

Raj Date gets into mortgage business

To hear former Consumer Financial Protection Bureau official Raj Date talk about his latest venture, you may think he's cracked the code to writing fail-proof mortgages.

You'd think that, and you'd be wrong.

Date's consumer finance advisory platform and investment vehicle Fenway Summer is now officially joining with Ethos Lending in order to get into the mortgage market.

Further, he says writing QM loans should not be too challenging.

“There’s no special QM loophole written in invisible ink that only I can see,” he said in an email to Dealbook. “There is no secret key to the mortgage kingdom. We’re going to compete like I hope everyone does: play by the rules, make great credit decisions, deliver great customer service.”

[Editor's note: Fenway clarifies Raj's above quote is not in reference to the level of difficulty, or any level thereof, involved in making non-QM loans.]

Further, in order to keep with his lender-with-responsibility image, he shares that Fenway will not look to sell Ethos loans to "Wall Street," which is also hardly a novel approach to writing mortgages.

Later in the year, if all goes well, Ethos will drift into the non-QM strata.

“Our mission at Fenway Summer is to build great consumer finance businesses,” said Date, in a statement. “Our mortgage business, together with Ethos, is a terrific first example – a technology-enabled business that will deliver great products to otherwise underserved customers.”

Ethos Lending anticipates beginning to originate agency mortgages in the 2nd quarter of 2014. By the end of the year, Ethos plans to be one of the first wholesale originators of non-qualified mortgages. Ethos will offer affordable and accessible mortgage products that are unavailable in the market today, such as interest-only loans under the current conforming balance threshold of $417,000.

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