Adam Constantine on MLK Jr.’s impact on housing equality

During the interview, Constantine explains why the industry needs to focus on evoking intentional change rather than launching lackluster initiatives.

Navigating capacity concerns amidst record-high volumes

High loan volumes continues to loom large in the new year, making the “one-stop-shop” approach to the servicing and lending process even more appealing.

Amid record-high origination volumes, mortgage fraud risk is down

CoreLogic's recently released Mortgage Fraud Report is the industry standard for nationwide fraud monitoring and analysis. Read the findings here.

How student loan debt impact homeownership

Student loan expert Catalina Kaiyoorawongs shares her practical and tangible advice for people who feel overwhelmed by their student loan debt.


CoreLogic: Only half of today’s mortgage originations meet QM requirements

About half of today’s mortgage originations would not qualify as a safe loan under the qualified mortgage rules if the market were to remove all exemptions for government-sponsored loans, CoreLogic (CLGX) said in a new report.

The Irvine, Calif.-based research firm made that conclusion in a new February MarketPulse Report examining the impact of the qualified mortgage and related rules such as the qualified-residential mortgage provision outlined by Dodd-Frank.

Right now, the rules’ potential impact is minimal since loans financed and guaranteed by the housing agencies and the Federal Housing Administration represent 90% of all originations, according to a report from Sam Khater with CoreLogic.

But when analyzing originations currently taking place against bench marks that will be set by the new mortgage rules, CoreLogic concluded that “loans financed or guaranteed by both the GSEs and FHA combined account for roughly 90% of originations. Thus, given that the loans approved by an automated underwriting system operated by Fannie, Freddie or FHA/VA are waived during a transition period, the near- and intermediate-term impacts of the rule are very small.”

But CoreLogic says, “When the exclusion expires in seven years (or prior), it is estimated that only 52% of originations will meet the eligibility requirements of the QM rule’s safe harbor.”

The QM rule’s debt-to-income ratio ceiling of 43% removes roughly 24% of all originations from the qualified pool. And when adding the resulting impact of all the QM guidelines and related provisions, about 48% of today’s qualified originations would not be eligible in a QM world without the GSE exemptions. 


But Khater clearly sees an upside to the impact QM will have on the mortgage marketplace.

“QM was implemented to minimize risk layering, which magnifies risk in unexpected ways. Will it succeed? In CoreLogic’s view, the answer is a resounding yes,” he wrote.

“While QM and QRM remove 60% of loans, they remove more than 90% of the risk space, the DTI rule removes 36% of all serious delinquencies (SDQs), followed by loans with credit score of less than 640 (28 percent of SDQs) and the 10% down payment (18 percent of SDQs).”

Since the jumbo market currently accounts for 10% of all mortgage finance transactions, while lacking exemptions available in the conforming market, the QM rule will start to shake up the jumbo space in early 2014, Khater asserts.  But the impact will not be as extreme. Khater says more than 62% of total jumbo originations today would meet the eligibility requirements of the QM safe-harbor provision.

“Similar to the overall market, DTI and low or no documentation combined have the largest impact, accounting for 30% of the jumbo market,” he said. “Since down payment requirements are much higher for jumbo loans than conforming loans, the impact of minimum down payment requirement (QRM) is smaller for jumbo loans than for conforming loans.”

In states like Nevada, only 42% of originations meet the safe harbor provisions of QM. And in Hawaii, only 43% of today’s loans qualify. Alaska situation is potentially worse with only 44% of current originations qualified for QM, based on CoreLogic’s analysis of the marketplace.

Overall, Khater concluded that QM in the near-to-medium term will be small and should “reinforce the role of the GSEs” in the market.

Jumbo loans will be moderately impacted in 2014. And in the long run, about half of all originations that pass easily pass through the system today will feel the effects of the rules, the report concluded.

Most Popular Articles

Prepare for the rise in mortgage rates

Economists offer their takes on how high mortgage rates will climb, how lenders will respond and what impact this will have on the housing market. HW+ Premium Content

Jan 18, 2021 By

Latest Articles

2020 ends with 3.4 million loans in delinquency

The final delinquency tally for December is in, with data revealing that by end of 2020, 1.54 million more mortgages were reported delinquent.

Jan 22, 2021 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please