Mortgage Daily Logo

Non-QM Lending Share Nearly Doubles

Mortgage News

On a quarter-over-quarter basis, the share of home loans originated that weren’t Qualified Mortgages nearly doubled. Meanwhile, a big portion of lenders are still nervous about meeting QM requirements.

Sixty-four percent of lenders had issues closing loans during the third quarter as a result of some facet of the QM rule. But the share eased from exactly two-thirds in the second quarter.

The biggest issue hurting the market in the third quarter was credit overlays. After that was documentation, then debt-to-income ratios.

The findings were discussed in the Fourth Survey of Mortgage Originators 2014: RHS, Consumer Constraints, and Rate Expectations from the National Association of Realtors.

The survey was conducted in October and sent to 135 mortgage originating entities. Twenty-five unique responses were received.

“Respondents’ confidence in their preparations for the QM/ATR rules eroded again in the third quarter, with just 58.3 percent indicating that they had fully adapted compared to 61.9 percent in the second quarter,” the report stated.

During the third quarter, 5.0 percent of loan originations were non-QM loans. The share nearly doubled compared to the 2.6 percent in the second quarter.

But the share of closed loans designated as rebuttable presumption QMs dropped to 3.5 percent of production from 12.8 percent in the prior three-month period. Still, the share of originators offering rebuttable presumption inched up to 84.0 percent from 83.3 percent.

Safe harbor QMs represented the bulk of third-quarter originations: 91.5 percent. The share jumped from 84.6 percent three months earlier.

Nearly a fourth of lenders indicated that investor takeout for non-QM loans had improved from the second quarter.

“Willingness to originate non-QM mortgages fell dramatically from the 2nd quarter, but the decline was less dramatic for rebuttable presumption mortgages,” the report stated. “Lenders were more willing to originate prime mortgages with the exception of those with lower FICOs.”

The Rural Housing Service increased the fee it charges program users to 0.5 percent from 0.4 percent. More than 58 percent of survey respondents said the increase will have a moderate impact on RHS lending in their area, while more than 8 percent said the impact would be significant. No impact was expected by nearly 17 percent.

Repurchase demands significantly impacted 42 percent of lenders’ decision to lend, and another 4 percent indicated a moderate impact.

Related Posts

Mortgage Servicing Lawsuits

Mortgage Servicing Lawsuits

Litigation related to loan servicing, including escrow issues, transfer of servicing and servicing borrowers in bankruptcy and foreclosure. Defendant Plaintiff Court Amount Overview Case Title Case Number Date Filed Date of Activity Link to Story BAC Home Loan...

Mortgage Servicing Lawsuits

There is No Such Thing as a Free House …

Over the past several years, those who service loans in the State of Washington(1) have seen a dramatic rise in the number of lawsuits in which delinquent borrowers seek to quiet title to their homes on the grounds that lenders are barred from foreclosing based on...

Mortgage Servicing Lawsuits

Value to Drive Borrower Engagement at Mortgage Lenders

The mortgage industry has fundamentally changed over the previous 10 years, particularly as we�ve shifted from a refinance-driven environment, to focus more on purchase originations. A number of lenders have built successful businesses around the last two decade�s...

Mortgage Servicing Lawsuits

Creating a Positive Customer Experience

Creating an optimal customer experience has become increasingly critical for mortgage servicers as each customer’s business becomes harder to earn and retain. Most servicers outsource the complex process of homeowner insurance tracking and must ensure their insurance...

Popular posts

When Can I Move in and How Do I Get the Keys?
When Can I Move in and How Do I Get the Keys?

It’s no secret that the process of buying a home can be lengthy and fairly complex – between funding, making an offer, negotiating with the seller to win over the home, and ultimately setting a closing date. Although there were presumably points of confusion and...

What Do Attorneys Do in a Real Estate Transaction?
What Do Attorneys Do in a Real Estate Transaction?

Responsibilities of a Real Estate Attorney Reviewing documents - such as purchase agreements, title documents, mortgage docs, transfer documents and typically represents a buyer or a seller. They are certified professionals who oversee the legal aspects of real estate...

What is Homeowners Insurance and Why Do You Need It?
What is Homeowners Insurance and Why Do You Need It?

Homeowners insurance is a type of insurance that provides financial protection against damages to your home, as well as your personal belongings. It is important to have homeowners insurance if you own a home, because it can help protect you from costly repairs or...

Closing on a House: What to Expect and Closing Day Tips
Closing on a House: What to Expect and Closing Day Tips

Your train has finally arrived at the station. Congratulations you have made it to the closing table after months of house hunting, jumping through the hoops for a successful loan process and mountains of paperwork. Typically, this paperwork journey takes about 4-8...

How To Win a Bidding War on a House
How To Win a Bidding War on a House

When supply is low and demand is high, it’s important to arm yourself with an awareness and expectation that the house of your dreams may enter into a bidding war. Competing for a house, with multiple offers pushing the price higher, may seem like a less than an ideal...

Newsletter

Don’t worry, we don’t spam