The “ability-to-repay” rule or Qualified Mortgage Rule is slated to come into effect in 2014, and it could impact mortgage availability with a number of newly-defined underwriting standards.
This new regulation comes in response to a time prior to the mortgage crisis, when loans were being offered to consumers with little concern for their actual ability to repay the loan amount in full. Because of the loose standards of some creditors during this time, we experienced one of our country’s most serious downturns since the Depression.
Since the mortgage crisis, those in our industry have worked hard to rebuild the market through the use of better checks and balances within the loan approval process – which is where the Qualified Mortgage Rule comes in to play.
Mortgage applicants will now need to satisfy eight minimum requirements which help a lender determine their loan eligibility and provide justification for the loan approval. The new provisions go above and beyond income verifications, they help to verify their ability over the long term to repay the loan amount.
The QM rule also addresses subprime loans by further fortifying the conditions that need to be met to qualify for a loan of this type.
Please contact me to determine whether the Qualified Mortgage Rule affects you, and find out how I can help!