About The Real Estate Group

The Real Estate Group (TREG) "Partners in Excellence"

The mission of The Real Estate Group, LLC is to be Hampton Roads finest provider of real estate services. Our goal is to create a company that provides absolutely the best service for our customers by fostering an environment of teamwork and a common vision. The Real Estate Group, LLC consists of an accomplished team of skilled professionals who take pride in their work and their company. We work hard to go beyond the expectations of our customers, agents, and employees.

QM and ATR Mortgage Rules on January 10th

Friday, January 10th marks the dawn of a new era in mortgage lending.

New regulations called Qualified Mortgage (QM) and Ability To Repay (ATR) will officially go into effect.  There has been a lot of talk about how this will impact mortgage lending.  In general, most of what is becoming law is already in effect and underwriting standards will not really be changing that much. The new rules are part of the Dodd/Frank banking reform bill passed as a reaction to the financial meltdown of 2008.  The biggest impact will be felt in Jumbo mortgage lending since that will fall outside of the Fannie/Freddie, FHA and VA temporary protections.  Here are a few bullet points on the new rules:

QM – Qualified Mortgage – effective Jan 10th, 2014

  • QM sets rate and fees caps of 3%
  • QM sets a Maximum Debt to Income Ratio of 43%
  • QM regulates the types of loans available  – no negative amortization allowed and sets Limits to short term ARMs

TQM – Temporary Qualified Mortgage

The new Rule will give an 8 year exemption to loans underwritten to Fannie Mae, Freddie Mac, FHA, and VA guidelines until these agencies issue their own definitions of Qualified Mortgage.

ATR – Ability to Repay – effective Jan 10th, 2014

ATR effectively takes what are now mortgage underwriting “guidelines” and turns them into “Law”. The law prescribes that mortgage companies consider 8 factors in considering an applicant for mortgage approval.  The CFPB has issued a final ruling on underwriting standards called Appendix Q. The industry is already underwriting to the same standards as prescribed in Appendix Q.

Click here to view the Appendix Q   ***WARNING – this is 56 pages that will definitely put you to sleep.

How will this Impact Real Estate Professionals and their Clients?

The biggest Impact will affect the timing of processing and closing a loan.  The Law also implements many new third party verification and audits.  For example, in order to comply with the new rules, mortgage companies will need to randomly select 10% of files that are clear to close for 3rd party audit.  A file selected for audit will take longer to close. The new laws are also forcing mortgage companies to make ongoing IT changes to their origination and processing systems.  The rules are also still morphing and changing and clarifications are issued almost daily.  This will most likely push turnaround times out to 30-45 days while lenders are sorting out all the new rules and changes.

Contributor – Todd Starr, Regional Home Mortgage

 

About The Real Estate Group

The Real Estate Group (TREG) "Partners in Excellence"

The mission of The Real Estate Group, LLC is to be Hampton Roads finest provider of real estate services. Our goal is to create a company that provides absolutely the best service for our customers by fostering an environment of teamwork and a common vision. The Real Estate Group, LLC consists of an accomplished team of skilled professionals who take pride in their work and their company. We work hard to go beyond the expectations of our customers, agents, and employees.