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QM - What Is It And How Might It Affect Your Buyer Or Seller?

Posted by Benjamin Dona on Saturday, March 1st, 2014 at 7:51pm.

CFPB Guidelines for Qualified Mortgages (QM)On January 10, 2014, the Consumer Financial Protection Bureau (CFPB) implemented their new guidelines for mortgage loans. You may have heard the term Qualified Mortgage (QM) being used by your lender or loan officer, or heard something about them in the news lately. A qualified mortgage is one that offers the lender protections, so long as they comply with all of the CFPB guidelines. Lenders who make loans that are outside of the QM guidelines lose protection against the borrower suing them on the basis that the loan they obtained was unfair.

However, these new guidelines may make mortgages harder for borrowers to obtain and that has consequences for both Buyers and Sellers to consider when purchasing a home.

In order to qualify for a QM, lenders haven't changed the guidelines in collecting the data from independent third parties to verify income, assets, credit worthiness, debt obligations, and qualifying the property (appraisal) or calculating the monthly mortgage and monthly total debt expense. However, the back-end ratio of all debts, with the total monthly housing expense added in, is limited to 43%. There are...

To finish reading our entire post on QM and how it may affect a buyer or seller, please visit our Realty Times page Here.

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