A couple of other Consumer Financial Protection Bureau Qualified Mortgage Rules (QM) that have also been revealed other than the Ability-To-Repay are provision to limit points and fees on Mortgages, including points and fees to compensate Loan Originators. The other feature of the Consumer Financial Protection Bureau Qualified Mortgage Rules (QM) will impose a 43% cap on the Debt-To-Income Ratio for all Mortgages.
As I mentioned in my previous blog on the new QM Rules titled Consumer Financial Protection Bureau Qualified Mortgage Rules, I stated that a major flaw of the QM Rules is that they were put together without, or with very little input from Industry Professionals that have a much better understanding of the impact that the QM Rules will truly have. These two QM Rules above will further demonstrate this flaw.
First the provision to limit points and fees on all Mortgages, including points and fees to compensate Loan Originators, is already in place. So once again the lack of knowledge about the Industry, and what is in place already, continues creates more and more duplication. Loan Originator working for a Direct Lender have to already be compensated the same percentage on all Loan Programs, the only exception that I am aware of is on additional compensation for volume. A Lender or Bank can provide a volume incentive to their Loan Originators, but they cannot charge points on those loans to produce the extra compensation. Furthermore, points associated with the loan cannot be passed on to Loan Originators in the form of extra compensation. I am not a Mortgage Broker, so I do not know what the present rules are on compensation for Brokers, but I know that the compensation rules that were created about 2 years ago have also changed the way Brokers can be compensated. Hopefully if a Mortgage Broker is reading this blog they can explain those change, and if this new QM Rule is a duplication of what is already in place for them.
The new QM Rule limiting the Debt-To-Income Ratios to 43% will have a MAJOR impact on Borrowers, especially on Lower Income Homebuyers. Lowering the Debt-To-Income Ratios to 43% on all loans will disqualify many good Borrowers. This QM Rule maybe more than any other that I have read about so far, is completely contrary to what the spirit of the QM Rules are suppose to be about. This QM Rule is not protection, This QM Rule is about exclusion of low income Buyers from the market place. I will further explain this in my blog tomorrow.
The Qualified Mortgage (QM) Rules were crafted by the Consumer Financial Protection Bureau (CFPB) with one intent, but so far it appears that the Consumer Financial Protection Bureau Qualified Mortgage Rules (QM) will produce the opposite. As I stated at the close of my previous blog Consumer Financial Protection Bureau Qualified Mortgage Rules, "no matter what my opinion, or anybody else's opinion is about the Consumer Financial Protection Bureau Qualified Mortgage Rules, the proof will be in their implementation overtime."
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 firstname.lastname@example.org