Orlando Mortgage Blog

Did you know Ability-to-Repay Changes are coming?

December 6th, 2013 2:12 PM by BILL WILBANKS

The Consumer Financial Protection Bureau (CFPB) has set many guideline changes that will have an impact on mortgage lending as of the law going into effect as of January 10, 2014 under the new "Qualified Mortgage" guidelines that same day and forward.

One change that will undoubtedly have an effect on many would-be mortgage applicants from that date forward will be the new debt-to-income (DTI) qualifying ratio that is to be capped at a maximum of 43 percent of the borrower(s) gross verified monthly income. That 43% will include the total household monthly obligation for your home to include principal, interest, taxes, insurance and any other obligation or special assessment that applies plus all other monthly creditor payment debt. That's 43% or less period, not 43.01% or higher. This falls under the Ability-to-Repay rules effective January 10, 2014. Currently we see many applicants that are approved at up to 50% DTI all the time.  Let us assist in evaluating your actual status.

This will undoubtedly impact many well qualified would-be applicants and another example of how D.C. is helping Main Street today. 

The only exception will be small creditors with less than $2 billion dollars in assets and who originated less than 500 covered mortgages during a calendar year. A small creditor must also maintain a hold on their portfolio for three years. Lots of luck there folks. Small lenders would be expected to want to pass their loans through to the secondary market (GSE's like Fannie/Freddie) so as to free up those dollars to loan to the next customer. 

Bill Wilbanks

Posted in:General
Posted by BILL WILBANKS on December 6th, 2013 2:12 PM

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