Most lenders think rules are too strict. Here is a quick outline…
Underwriting Standards of Qualified Residential Mortgage (QRM)
- 28/36 maximum ratios
- Max LTV of 80% Purchase and 75% CLTV for Refis and 70% Cash Out
- 20% down payment for purchase transaction
- No 60-day late within 24 months (on any debts)
- Mortgage insurance does not increase quality of loan: therefore does not count
- Exemptions for “government guaranteed” assets: Fannie, Freddie, FHA, VA, Rural Housing
- No “non-traditional” products (interest only, negative am)
- Those mortgages not qualified will need 5.0% risk retention…several ways of meeting the 5.0% standard
The result? Higher rates, fewer choices for “non-conforming” products. And if Fannie/Freddie goes away?
Remember, these are not final.