Mortgage Availability Tightening? QM Takes Effect Today | Realtor Coaching | Real Estate Insider News – Real Estate Coaching and Training

From our friends at the National Association of Realtors. Excellent article that explains the changes to residential mortgages aka QM Qualified Mortgage.

NAR has been working with federal regulators since Congress in 2010 passed massive banking reform legislation, part of which created the qualified mortgage and qualified residential mortgage rules. Today is an important day in the timeline of those rules, because today is the day the qualified mortgage (QM) rule takes effect, and NAR has told regulators it will be watching to see what impact the rules have on mortgage availability.

“I promise you that REALTORS® will be your boots on the ground,” NAR President-elect Chris Polychron told the federal government’s main QM rule-writer, Richard Cordray, earlier this week. Cordray is the director of the U.S. Consumer Financial Protection Bureau (CPB), which was created as part of the same law that created QM and the qualified residential mortgage (QRM) rules.

Under QM, lenders are required to make sure borrowers have a reasonable ability to repay before they can make what’s known as a qualified mortgage. A qualified mortgage represents what CFPB views as a safe mortgage, and thus a mortgage that is expected to cost borrowers less, because the risk is less to lenders. How CFPB defines the “ability to repay” includes a maximum debt-to-income ratio of 43 percent. Also, while Fannie Mae and Freddie Mac are in conservatorship, their conforming loans are considered qualified. Also, loans by small community banks that meet certain criteria are considered qualified, as are FHA, VA and Rural Housing Service (RHS) loans.

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