Qualified Mortgages

Now that the Consumer Financial Protection Bureau says it will scrap an unpopular standard for so-called qualified mortgages, the big question is what will take its place.

Director Kathy Kraninger has told lawmakers that the agency will delay the expiration of the so-called QM patch, now set for January 2021.

Fannie Mae is sponsoring a $1.03B CRT transaction, while Caliber Homes Loans, New Residential and Onslow Bay fill the non-QM pipeline

And the government-sponsored enterprises could hold initial public offerings in 2021 or 2022 to ensure they hold adequate capital, FHFA Director Mark Calabria said.

Fannie Mae and Freddie Mac’s exemption from the Qualified Mortgage rule is on borrowed time, but a House bill would allow lenders to use the mortgage giants’ guidelines for documenting borrower income.

The end of the qualified mortgage patch should further accelerate non-QM origination growth, but is the mortgage industry ready?

The recapitalization of Fannie Mae and Freddie Mac prior to the 2020 election is unlikely even if the net worth sweep ends, according to a Keefe, Bruyette & Woods report.

Though advocates and industry are rarely aligned, they are starting to coalesce around a plan that would call for the elimination of the CFPB’s 43% debt-to-income limit as part of its qualified mortgage rule.

Angel Oak is now offering mortgage brokers and correspondent loan sellers a prequalification tool to determine borrower eligibility for non-qualified mortgages.

With the agency mulling changes to the “Qualified Mortgage” regulation, mortgage lenders say little-known standards for how they document a borrower’s income would be a good place to start.