Tom Hutchens on GSE guidelines and the non-QM market

Today’s HousingWire Daily features an interview with Tom HutchensAngel Oak Mortgage Solutions’ executive vice president of production. In this episode, Hutchens talks about the reignited non-QM market, how new GSE guideline updates to Fannie Mae and Freddie Mac will increase supply for the non-QM sector, and what that means for the market at large.

For some background on the interview, here’s a brief summary of HousingWire’s latest coverage on the new GSE updates:

In Lender Letters issued on Thursday, Fannie Mae and Freddie Mac confirmed that loans purchased by the GSEs with application dates on and after July 1, 2021, must meet the standards of the Consumer Financial Protection Bureau’s Revised Qualified Mortgage Rule.

In the letters, the two government sponsored enterprises state that they will follow the directive laid out in their amended Preferred Stock Purchase Agreements with the Treasury Department, which forbid Fannie and Freddie from buying QM loans under the GSE Patch.

The guidelines in the letters stand in contrast to the CFPB’s most recent notice of proposed rulemaking, which seeks to delay the date lenders have to comply with the revised QM rule until October 1, 2022.

The CFPB final QM rule, issued in December, establishes a pricing threshold that effectively replaced the former debt-to-income limit of 43% with a price-based approach that gives lenders relief for loans capped at 150 basis points above the prime rate.

Before the revised QM was finalized, many lenders were able to circumvent the 43% DTI limit because the rule doesn’t apply to mortgages backed by the GSEs. This “QM Patch” would expire with the new rule going into effect on July 1. The CFPB threw a wrench into this timeline with their proposed rulemaking, but both Fannie and Freddie are bound by the amended PSPAs with Treasury.

HousingWire Daily examines the most compelling articles reported across HW Media. Each afternoon, we provide our listeners with a deeper look into the stories coming across our newsroom that are helping Move Markets Forward. Hosted by the HW team and produced by Alcynna Lloyd and Victoria Jones.

HousingWire articles related to this episode:

This content is exclusively for HW+ members.

Start an HW+ Membership now for less than $1 a day.

Your HW+ Membership includes:

  • Unlimited access to HW+ articles and analysis
  • Exclusive access to the HW+ Slack community and virtual events
  • HousingWire Magazine delivered to your home or office
  • Become a member today

    Already a member? log in

    HousingWire Daily

    Hosted by the journalists behind the headlines, HousingWire Daily examines the most compelling mortgage, real estate, and fintech articles reported from the HousingWire newsroom.

    3d rendering of a row of luxury townhouses along a street

    Log In

    Forgot Password?

    Don't have an account? Please