Mortgage Business, Realtor Advice

What Real Estate Agents Need to Know About the Qualified Mortgage Rules!

The Consumer Finance Protection Bureau has created a Qualified Mortgage Rule (QM) which goes hand-in-hand with Ability-to-Repay rules (ATR).

In a nutshell, here’s a simplified explanation of what QM is all about and how it will affect you and your borrowers when applying for a mortgage loan starting January 10, 2014.

The Mandatory Product Features for all Qualified Mortgages (QMs) are as follows:

  • Points and fees are not supposed to exceed 3% of the loan amount based on the following:
    • The 3% limit is for loans that are $100,000 or higher
    • $3,000 for a loan amount between $60,000 and $99,999
    • 5 percent of the total loan amount between $20,000 and $59,999
    • $1,000 for a loan amount between $12,500 and $19,999
    • 8 percent of the total loan amount for loans less than $12,500
  • No risky features are allowed, such as negative amortization, interest-only, or balloon loans
  • Maximum loan term must be 30 years or less.

The three main categories of a QM loan are as follows:

  1. General Definition of QM Loans – any loan that meets the product feature requirements with a debt-to-income ratio of 43% or less
  2. Types of QM loans – FHA, VA, Conventional (Fannie & Freddie) and USDA
  3. Small Creditor Category of QM loans – If a mortgage company, small community bank or credit union that has less than $2 billion in assets originates 500 or fewer first mortgages per year AND holds the loan in their portfolio, the 43% does not apply, but they must still verify the borrower’s ability to repay the loan.

What does this mean to you and your clients?

  • Underwriting will be more strict
  • More documentation will be required
  • Pre-approvals become MORE important than ever before
  • Re-verification of income, credit and assets will be required before closing

Some lenders will be offering Non-Qualifying Mortgage loans, but you can be assured that the lender will make sure that all Ability-To-Repay requirements are met. An example of a Non-QM loan would be a Jumbo Mortgage with Interest Only payments.

What would you like to know about Qualified Mortgages or the Ability-to-Repay rules?

Mortgage Business, Realtor Advice

Why Do We Need Your Paperwork?

If you had $200,000 to hand out to complete strangers, wouldn’t you be cautious who you gave it to?  Of course you would! 

This is why, at the beginning of your transaction, you will be asked many questions about you, your finances and your credit.  You’ll need to disclose everything.

Why?  The mortgage process is a great equalizer; it does not matter if you are rich or poor, every consumer is treated as though they are lying and committing fraud until we prove otherwise. No matter how much documentation we collect up front, you will likely be asked to produce more throughout the process.  This is a painstaking process.  Accepting the multiple requests for redundant documentation necessary for lender approval and making those documents available as soon as possible will make the approval process easier. Continue reading


Weekend Update from the Jeff Baxter Mortgage Team

What is all this about QM and ATR?

Happy Saturday morning.  Yes, it’s still cold and another storm is coming, but it’s not the weather I wanted to talk about this weekend.  The storm I’m talking about is the implementation in the mortgage industry of QM (Qualified Mortgage) rules and ATR (The Ability to Repay).  All lenders, not just Prosperity, have to adhere to these rules effective on January 10,, 2014.  I’ll be sending out more information over the next few weeks, but here is a quick review.

A QM or Qualified Mortgage focuses on 3 main areas – 1) a limit on loan features, 2) a points and fee cap, and 3) relevant underwriting criteria.  Lenders that originate loans to the QM standard are given a “safe harbor” against potential lawsuits for placing a borrower in an inappropriate mortgage.  Of course, nothing can stop anyone from suing a lender, but this protection is important enough that many lenders may only do QM compliant loans.  So what is that?

Continue reading


Weekend Update from the Jeff Baxter Mortgage Team


We are offering a FREE buy down of the interest rate of ½% on new purchase mortgage applications accepted and locked THRU NOVEMBER 15TH!  Our current 30 year fixed rate on a conforming loan is 4.25% (4335% APR).  If a new purchaser locks that rate on a new application, we will buy the rate down for the first year to 3.75%.  In years 2 through 30, the rate goes back to 4.25%.  On a $300,000 mortgage, that’s a savings of $86 per month or $1,037.  What a great closing tool to get a buyer off the fence and make that offer.  There are some restrictions so give me a call.

Market Comment

Mortgage bond prices finished the week lower which pushed mortgage interest rates higher. Continue reading

Mortgage Business

New Mortgage Program – Non Conforming Doctor Program

Introducing Prosperity Mortgage’s New…….
Non Conforming Doctor Program

Approximately 16,000 potential customers graduate from medical school every year (according to the Association of American Medical Colleges) and many of them may be looking to purchase a new home. Prosperity Mortgage is offering a new program – the Nonconforming Doctor Program – to help build long-term relationships with these customers. Available on Monday, Dec. 5, 2011, this program offers financing opportunities for medical doctors within the first 36 months of them completing their residency requirements.


Details of the program:

  • Maximum Loan Amount: $850,000
  • Minimum Down Payment: 10.01%
  • Occupancy:  Primary Home Only
  • Minimum Credit Score: 720
  • Rate Discount available: YES w/ a Wells Fargo checking account
  • Mortgage Insurance: NOT REQUIRED!
  • Post Closing Reserves: 5% can be both retirement and non retirement funds
  • Available on 30 year fixed rates and 5/1, 7/1 and 10/1 ARM’s

The borrower needs to be a medical doctor (not a dentist nor a veterinarian).  Please call or email me with questions about this new program.


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