“What Effect the New QM Rules Could Have on Mortgages in the Future?”
I keep reading that the new QM rules will have very little effect on future home buyers. In the article below it is suggested that 90% of buyers won’t be effected by a 43% debt ratio.
So let me demonstrate some real numbers. This is based on the last two years of mortgages, that I did, not based on theory.
Debt ratio under 25%, 16%---- Debt ratio 26% to 33%, 18%---- Debt ratio 34% to 39%, 19%---- Debt ratio 40% to 43%, 21%---- above 44% is 26%. This is based on real numbers.
So, if some attempts to tell you that a 43% maximum debt ratio won’t have much effect, they don’t have a clue.
By: Brian Collins
The mortgage industry is facing a “regulatory tidal wave,” according to the Mortgage Bankers Association, as regulators are finally issuing the new rules mandated by the Dodd-Frank Act of 2010.
In the past two weeks the Consumer Financial Protection Bureau has issued four rules, including the qualified mortgage rule and a servicing regulation. More regulations are in the pipeline from the CFPB and other regulators.
“These changes will impact business operations and the future of mortgage access for years to come,” according to MBA president and chief executive David Stevens.
He noted that the QM rule is unlikely to have much impact on the availability of credit since 90% of loans originated today go through Fannie Mae, Freddie Mac and Federal Housing Administration automated underwriting, which the CFPB will recognize as QM loans.
“However, it is not going to do much to loosen credit either,” Stevens said in speaking to the Exchequer Club in Washington.
To achieve the right balance, the MBA executive wants the White House to appoint a “traffic cop” to provide some coordination over the onslaught of mortgage regulations that will be issued over the next six months.
“We can get the rules done right with a coordinated, balanced approach that doesn’t tighten credit,” he said.
A White House office of housing policy “won’t have the authority to tell regulators what to do,” Stevens said.
But this traffic cop could get the regulators to work together, identify conflicts between regulations and try to balance the timing of the implementation of regulations and their impact on the market.
“It would give us all greater confidence in the real estate finance market and help set housing on a sustainable recovery path,” Stevens said.
The MBA president also noted that Fannie and Freddie need to be included in the regulatory network.
Other government agencies are required to issue proposals for public comment when they make significant changes in their rules or requirements.
The GSEs are significant in part of the “broader housing and economic ecosystem,” Stevens said, and they should be more open and transparent in making major policy or business changes.
“The good news is that the Federal Housing Finance Agency, Fannie Mae and Freddie Mac have shown a willingness to discuss how we can work toward transparency and be better coordinated going forward,” he said.
A few months ago, the GSE regulator issued a proposal that called for merging Fannie and Freddie’s securitization platforms so it could for used for issuing both agency and private-label MBS.
But aspects of the FHFA proposal troubled several trade groups, including the MBA. The GSE regulator is reconsidering that proposal.
image courtesy of ddpavumba/freedigitalphotos.net
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