Special offer

QM and ATR - Don't Believe The Hype!

Mortgage and Lending with Northpointe Bank - NMLS #709729 NMLS #709729

Effective this past Friday two new government rules took effect.  These rules known as QM (Qualified Mortgage) and ATR (Ability to Repay) made headlines throughtout the country and the real estate community as a whole.  


Many have misinterpreted these new rules to believe the process of getting a mortgage will be more difficult.  The truth is, these new rules should have limited to no impact on most real estate transactions.  Lenders who have always lent responsibly have been following many of these rules for years.  In addition, most conventional and government loans already meet these requirements.  


The Qualified Mortgage and Ability to Repay rules require lenders to make loans that homeowners can reasonably afford to repay under terms that protect homeowners from loan features that often times led to problems (such as negative amortization, interest only loans, balloon loans and loans with terms greater than 30 years).  In addition, the new rules put in place a cap on the points and fees that a borrower can pay in order to maintain the Qualified Mortgage status.  Substantially most conventional and government loans will meet these requirements when the loan is structured properly.


With the Ability to Repay rule, lenders are required to review the borrowers income to ensure that they can afford to repay the debt.  While the new rules require a debt to income ratio of no more than 43%, loans approved by Fannie Mae, Freddie Mac and FHA/VA's automated systems may still allow borrowers to qualify with ratios greater than 43% and still meet the requirements of the new rule (However, I suspect at some point that will change and may have an impact on some borrowers)


There are some transactions that will not meet the new Qualfied Mortgage rules.  Many lenders will not be willing to make loans that do not meet the new requirements.  At Northpointe, we have already developed products for clients who have a documented Ability to Repay but do not meet the Qualified Mortgage rule for any number of reasons.  These programs are exclusive to Northpointe.  Should you have a loan that is not eligible under the Qualified Mortgage rules please contact me for details on how we may be able to help.


The key to a successful transaction is obtaining proof of income and supporting documents from clients quickly to ensure that the client is able to qualify and meet the requirements of the new rules. In addition, seasoned lenders will also work to make sure the loan is structured properly to ensure it meets the governments points and fees limits. 


If you have questions about these new rules or are looking for a seasoned veteran loan officer please contact me.  I can be reached at 616-931-4629, dan@danmoralez.com or via my website at www.danmoralez.com.



Lisa Perry - NMLS # 276329
FHA, VA, Jumbo, Downpayment Assistance, Conv. - Fairfax, VA
Northern VA - VHDA, 100% Loans - Jumbo Loans

Good post and you put it plainly. These extra rules, although a pain will not affect us if we structure and document the loan. 

Jan 11, 2014 09:31 AM
Dan Moralez
Northpointe Bank - NMLS #709729 - Holland, MI
Grand Rapids & Holland, Michigan Mortgage Lending

You are right Lisa.  Not as bad as what most people are making it out to be.  Thanks for taking the time to comment and read.  Hope you have a great 2014!

Jan 11, 2014 09:38 PM
David Shamansky
US Mortgages - David Shamansky - Highlands Ranch, CO
Creative, Aggressive & 560 FICO - OK, Colorado Mtg

And thats what it is  HYPE. Yes there are some who will suffer from this but from its onset I have posted its a toothless dog. There truly arent much in here that isnt already implemented. its all about compliance anyway now that we are a 100% fed industry

Jan 12, 2014 02:05 AM
Dan Moralez
Northpointe Bank - NMLS #709729 - Holland, MI
Grand Rapids & Holland, Michigan Mortgage Lending

I would agree David, compliance is the name of the game.  I hope your year is off to a great start.

Jan 14, 2014 01:21 PM