Several mortgage industry service providers are eager to help home lenders comply with the Qualified Mortgage rules, which go into effect in less than two months.
The Consumer Financial Protection Bureau's QM and Ability to Repay rules become effective on Jan. 10, 2014.
Many lenders are ill prepared for the upcoming rules, according to Certified Credit Reporting. Collecting the right information to verify income and debts, as well as conducting adequate due diligence, gets lenders most of the way there.
"The key is to know what you need and find a clear path to get there," Certified Credit Reporting Founder and Chief Executive Officer Lucy Kereta-Block said in a news release. "Many lenders seem to either be struggling with internal solutions or hoping that the effective date changes.
"In the process, they may be missing the most reasonable path to a solution, which is leveraging technology to comply efficiently."
Certified said that it provides a third-party QM stamp on loans, and its fraud and identity products, income tax transcripts, background screening, credit information and pre-closing employment checks, and valuations help it provide a seal of approval.
Another credit vendor, National Credit-reporting System Inc., said last month that its TRV Cash Flow Analysis Report solution integrates IRS-direct data about a borrower's income into Fannie Mae 1084 worksheets -- helping lenders meet CFPB requirements.
Zillow Inc.-subsidiary Mortech Inc. announced Tuesday a suite of CFPB compliance tools that are built into its Marksman pricing engine. The enhancements enable compliance beginning at the point of the pricing inquiry -- prior to entering information in the loan origination system.
QM-specific features include an APR/APOR rate check spread, debt-to-income ratios, lender fees and points calculation, and non-qualification due to loan risk.
"When a lender selects a loan product, they are immediately notified whether it passed or failed the QM test," the statement said. "The lender can see which portions of the deal passed or failed, and the calculations used by Marksman to make this determination."
The LoanScoreCard QM Findings Report can now be submitted to Wells Fargo Home Mortgage in lieu of the "Fee Details Form," LoanScoreCard said last week. The Irvine, Calif.-based company claims it was Wells Fargo's first acceptable vendor alternative.
LoanScoreCard reports that it has rendered more than 35,000 QM Findings Reports so far. The services is reportedly available to users of major LOS offerings.
A new QM test was rolled out to DocMagic Inc. users last month and is currently in testing with a limited group of clients. The offering will help lenders identify new originations as either a safe harbor QM, a rebuttable presumption QM or a non-QM loan.
"The calculations used to determine whether a given loan qualifies as a QM mortgage can be complicated," the Torrance, Calif.-based firm said. "DocMagic's new functionality makes it easy, returning a Qualified Mortgage determination to the lender automatically, without forcing users to learn a new process."
A white paper published last month by CoreLogic Inc., ATR/QM Standards: Foundation for a Sound Housing Market, is the first in a series of reports. The white paper analyzes the QM and Ability to Repay rules and features an explanation about why the rules were created and how mortgage firms can benefit from the transparency provided to build investor trust over time.
CoreLogic noted that the report provides help understanding the impact of making a QM loan versus a non-QM loan and when a safe harbor kicks-in. It also gives an overview of how and why the rules were designed to put safeguards in place to protect borrowers who may not fully understand the terms of their obligations. In addition, it analyzes the government's intention to encourage private capital flow into the housing finance system and considers how the CFPB will conduct reviews and examinations to verify compliance.