NAR QM Survey Results Point to Negative Buyer Impact
Our analysis of the National Association of REALTORS® (NAR) survey on the qualified mortgage (QM) rule’s impact on lending and consumers reveal some alarming trends.
The QM rule became effective January 10, 2014 and is intended to ensure consumers have the ability to repay their loan. Sound underwriting is always important to lenders and borrowers, but concerns about the unintended consequences of these new rules continue to surface.
The findings in NAR’s recent survey of mortgage lenders should concern real estate professionals and consumers alike. They point to increased costs and limited options for buyers.
Assessment of key findings:
-Shadow industry looming: 45% of lenders indicated that they would not originate non-QM mortgages, mortgage rates would rise for all non- QM borrowers, including those with credit above 720.
-Lenders hedge their bets with additional buffers: Significant share of respondents indicate that would impose buffers such as debt-to- income ratios that go beyond the QM rule to ensure loans will qualify.
-Loan costs increase: Vast majority say they will increase staff and expenditures in response to QM.
-Impact far from being fully understood or felt: Nearly a third of lenders say it would be 3 – 6 months before they adapt to QM.
What can REALTORS® and lenders do to help their buyers?
In the report, NAR suggests that REALTORS® find lenders who specialize in financing “special cases” that fall outside QM. However, we argue that this guidance greatly understates the future impact on home affordability.
Instead, there’s an opportunity for REALTORS® to connect with lenders who partner with Housing Finance Agencies (HFAs). HFAs and the lenders who offer their low-cost mortgages and down payment assistance are exempt from the tighter restrictions imposed by QM due to their strong track record of responsible lending. REALTORS® will expand the pool of qualified homebuyers and their clients will be better served when they learn about their many home financing options. HFAs will not only provide safe and competitive solutions for consumers who don’t fit the QM box, but also for the many that do, yet aren’t aware of all their options.
Providing information about low-cost mortgages and down payment assistance to potential homebuyers is now a game-changing approach for REALTORS® – and it will help buyers. Down Payment Resource (DPR) can be your tool to expedite this process. DPR was just added as an Association benefit for you and connects eligible buyers and eligible properties to almost two thousand programs.