The Consumer Finance Protection Bureau (CFPB) Put new rules in place to prevent the public from making the same mistakes that contributed to the mortgage crisis of 2008. Here are some of the outlined key features:
1. Since 1.10.14, any lender making mortgage loans will have
to assess the borrower's true ability to repay the loan.
2. QM's can't have risky features like negative amortization
or interest only payments.
3. Borrowers must have a total monthly debt-to-income ratio
including mortgage payments of 43% or less. (This means that your mortgage payment + household expenses when added together, can not take up more than 43% of your income.)
4. Unlike the time during the mortgage crisis, the fees and
points in which lenders can charge are limited. Example: A loan over $100K can't be a QM if
it has fees and points that are more than 3% of the loan amount.
5. With QM's, anyone who is paid to offer, arrange or assist
you in finding a loan can't be paid to steer you into a higher cost mortgage
or be paid by someone else for the same transaction.
6. For as long as the next 7 years, loans eligible to be
purchased, guaranteed or insured by the VA and USDA or which are eligible to be
purchased or guaranteed by Fannie or Freddie are automatically QM's as
long as they meet certain product requirements... Under HUD rules, loans
insured or guaranteed by the FHA or HUD are also QM's.
7. Qualified Mortgages are easy to find, just about any
lender can offer them... QM's do provide a way to meet the ability to pay requirement
with the exception of low or no documentation loans. CFPB rules regarding QM's
do not ban other types of subprime non qualifying mortgages. The rules do say
that lenders have to make a reasonable, good faith effort to determine that a
consumer can repay a loan based on their documented income, assets, debts and
other common factors.
Learn more about QM's by visiting the CFPB website, live link below...
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