Qualified Mortgages (QM) is the Law for Home Buyers
2013 has been a year of government turmoil with budgets, healthcare, and a shut-down. Through all of this there has been proposals made that could greatly affect the ability of home buyers to obtain mortgage financing for the purchase of real estate. Most of the discussions and proposed legislation revolve around Qualified Residential Mortgages (QRM). The National Association of Realtors (NAR) has been highly involved in these discussions and has submitted multiple proposals of its own that would better align QRM's to QM's. Both deal with borrower's ability to repay loans.
20% and even 30% down payment requirements have been written into preliminary legislation in both the House of Representatives and the Senate. Through the hard work of the NAR, these requirements are being eased as continued studies of a borrower's ability to repay their loans have shown that it has less to do with down payment size than it does with responsible lending standards and ensuring a borrower’s ability to repay. With the borrower's ability to repay becoming the centerpiece of the adjustments to qualifications, there are expected to be adjustments to the debt-to-income ratio requirements of future loans.
Changes to QM to Protect Home Buyers
According to the National Association of Realtors website (www.realtor.org), "NAR supports the broad QM definition since it establishes strong consumer protections, ensures mortgage liquidity, incorporates important ability-to-repay standards, and offers lenders a safe harbor. " There are also some concerns expressed here, particularly with the ability-to-repay rules which ultimately limit competition for borrower's business.
The QM changes affecting the means and amounts of fees and points allowed to be charged by affiliated lenders will have a negative affect on those smaller, local lenders of whom get current borrower's business in that they will not be able to comply with the new QM rules and will no longer be able to lend mortgage money. The NAR is committed to making even further adjustments to the proposed law that will, while maintaining consumer protections, allow an expanded opportunity for lender participation so as to broaden consumer choice.
Ohio Home Buyers Have Help
The jargon of legislation and the depth of the changes in rules for lenders is confusing. There are very few people who are not involved in real estate lending who can make heads-or-tails of the current QM law, and even fewer who can with the proposed QRM. Thank goodness for your Realtor.
If you need help understanding the Homebuying process, contact me and I will either have the answer or be able to get it for you quickly. As a professional, full time Realtor, it is my job to learn all the things that affect the housing market in my area and this includes the ability of borrowers to get the loans that they need.