Federal regulators have taken steps to enhance mortgage financing for consumers. The Federal Deposit Insurance Corporation (FDIC) led the release of the Qualified Residential Mortgage (QRM) rule, the first of several financial regulators. The new rule results from the 2010 federal government banking reform bill ratified after the financial crisis.
The rule will take effect in 2015, which allows enough time for lenders to put into practice internal processing procedures that fit requirements. Some mortgage lenders such as Acuity National Real Estate Solutions, LLC have already aligned their internal systems with the Qualified Mortgage (QM) rule, which should make for a smooth transition.
The rule clarifies qualifications that make a mortgage loan safe and eligible for sale to investors affiliated with a mortgage-supported security. The loaner isn’t required to preserve the five percent risk-retention amount on the books. As a result, a QRM loan allows lenders to give more loans at a less-expensive rate since they don’t have to pass on the costs of risk-retention to borrowers.
For years, the National Association of Realtors (NAR) has been expressing that the QRM rule should fit well with the QM rule enacted since January 2014. The QRM is in line with their wishes and offers specifications for repayment that allow for safe loans at a fair rate. Steve Brown, president of the NAR, is glad that the FDIC has finalized the new QRM rule and that it lines up with the QM standard.
Both the QM and the QRM rules qualify borrowers with a debt-to-income ratio of 43 percent for loan approval. In addition, there is no difficult down payment stipulation, which regulators discussed including and which the NAR and federation partners were strongly against.
The new rule relies on solid and responsible underwriting instead of burdensome down payments for qualification. The old ruling would have prevented millions of Americans the right of entry to low, safe mortgages that are why the NAR opposed its inclusion in the QRM rule.
Now that both the QM rule and the QRM rule are in sync, there’s better access to mortgage loans, which should help boost homeownership sales. If you are ready to take advantage of the new QRM qualifications and enter homeownership, contact Acuity National Real Estate Solutions, LLC today at (502) 238-7500. We provide our clients the best of both worlds—old-fashioned professional excellence supplemented by the cutting edge technology necessary for an optimized process and smooth, speedy transactions. In today’s market, you need an agile title and closing partner that can still keep its feet on the ground.