Ability to Repay/Qualified Mortgage (QM) Rule
The new ATR/QM rules created by Dodd-Frank Wall Street Reform and Consumer Protection Act went into effect on January 10, 2014. Congress created the CFPB to make sure financial markets work for consumers. The CFPB created rules for mortgages and consumer financial products.
A Few Key Points about Qualified Mortgages:
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Limits on loan features
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No negative amortization or interest-only periods
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Loan term may not exceed 30 years
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Limits on upfront points and fees (depending on the size of the loan)
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A QM is a loan a borrower should be able to repay
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A QM is safer and easier to understand
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A QM should be a fairer deal
Underwriting Requirements:
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Monthly debt-to-income ration cannot exceed 43%
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Additional documentation may be needed
Questions?
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