The size of the residential loan market over the short-term will be determined by the definition of 'qualified mortgage' (QM).
This is more important to the industry than the definition of 'qualified residential mortgage' (QRM), declared a top lending executive for BB&T speaking at the Regional Conference of the Mortgage Bankers Association in Atlantic City.
BB&T executive Tim Dale said if regulators do not come out with a clear definition of a consumer's ability to repay – plus what will make up a rebuttable presumption to that – there will be very few non-QM loans originated. Lenders will be subject to draconian foreclosure defenses for non-QM loans, he predicted.
Depending on how the definition is worded, it will impact how much home lending will be done because it addresses access to credit, Dale said. If it is not done right, mortgage credit opportunities for low- and moderate-income families will be limited, he continued.
The mortgage industry can live with a “rebuttable” presumption rather than a safe harbor test, if regulators word it correctly, Dale said.
There are ways to create a rebuttable presumption that will allow consumer groups to be comfortable that it protects borrowers while at the same time allowing the mortgage industry to make loans, Dale said.
