The National Association of Mortgage Brokers (NAMB) has finally gotten on board with several other organization in petitioning the Consumer Financial Protection Bureau (CFPB) to clarify the Qualified Mortgage (QM) rules that are contained withing the Dodd-Frank Act.
Dodd-Frank Act contains several requirements that are pointed at the ability of a Borrower being able to qualify for a mortgage. The part of the QM rules that the NAMB is specifically targeting is the implementation of the "borrower's ability-to-repay" section. The NAMB is concerned about the "three percent cap and fees" rule. NAMB stated "that such a rule will most dramatically affect those purchasing homes and loans of lesser amounts."
Right now a loan is not considered a "High Cost Loan" until the total costs of the loan exceed 5%. Within the 5% are the normal cost of processing a loan, pulse any points that may be assigned to the loan.
The reason why this is particularly harmful to lower income borrowers is that many cost are fixed, so on a lower price properties those percentages would be reached very quickly. This decease from 5% to 3% would be particularly harmful to 203K loans which are more costly to underwrite, and would almost make them impossible to do. Here in Connecticut our Connecticut Housing Finance Authority (CHFA) loans, which are subsidized loans for first time homebuyers would also become very difficult to do, because of their higher cost.
I agree with the NAMB that rules like the "Borrower's ability-to-repay" rule could severely impact a borrower's ability to purchase a home by reducing their access to credit.
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Info about the author:
George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com
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