In certain ways, HUD’s "qualified mortgage" definition is less restrictive than the CFPB edict, including setting no limit on a borrower’s debt-to-income ratio.
“The CFPB’s treatment of balloon loans was a step in the right direction, and demonstrated recognition of the unique nature of community banking and a different approach to regulating them,” the CSBS says in a new white paper.
Due diligence was completed on 33 percent of the loans by American Mortgage Consultants. The firm found compliance exceptions regarding Truth in Lending Act requirements, right to cancel and HUD-1 forms.
Ability-to-repay requirements set by the Consumer Financial Protection Bureau could increase losses, liquidation timelines and loan modifications for non-agency MBS, according to Standard & Poor’s. The new requirements take effect Jan. 10 and include assignee liability for certain loans. Liability from the ATR requirements and qualified-mortgage standards are only a concern for non-agency MBS issuers and investors if a borrower defaults. Given the exceptionally strong performance of jumbo MBS issued since 2010, S&P said the threat of higher losses will generally be mild for jumbo MBS. However, performance could eventually decline...
Kroll Bond Rating Agency late this week released proposed criteria for rating non-QMs, making it the second rating service to formally seek comments on such criteria.
The strength of the non-agency jumbo market, at a time when securitization of these loans has slowed, suggests there is plenty of investor appetite for non-agency jumbos.
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