At some point in the next few months your bank will have to decide how it intends to comply with the Ability To Repay (ATR) requirements effective January 10, 2014. We covered these requirements in our March 2013 Newsletter.
One of the decisions management will be taxed with is deciding what categories of loans to make. For example will you make only Qualified Mortgages (QM), only Non-QMs or both QMs and Non-QMs? If you’re not sure what these are or how they differ please check out our Repayment Ability Risk and Requirements Matrix for a quick snapshot.
For those of you that make secondary market loans the decision has already been made. The Federal Housing Finance Agency released a statement on May 6, 2013, that Fannie Mae and Freddie Mac will only purchase loans classified as “Qualified Mortgages”, beginning with applications dated on or after January 10, 2014. This really shouldn’t be a surprise as we’ve been hearing this for quite some time now. This makes it a little easier as the decisions to be made only apply to your portfolio or in-house loans.
Stay tuned as I’m sure there will be much more guidance and opinion on this subject.