An excerpt of an article by ROB CHRISMAN at Mortgage News Daily:
Boy, I sure am glad we’re refinancing everyone* last year and this year, because after that, per CoreLogic, we’ll be down 60% in volumes due to QM & QRM restrictions – but the risk will be down 90%. And don’t forget we’ve got 7 years to change it. CoreLogic says about 60% of loans written today would not be acceptable under the finalized rules for a qualified mortgage (QM), and the anticipated rules for a qualified residential mortgage (QRM), after analyzing 2.2 million loans written in 2010 to determine what percentage of them meets QM and QRM guidelines. The firm chose 2010 because underwriting trends during that year because it believes they are quite similar to today’s. QM rules would eliminate about 48% of today’s mortgage originations, and when the QRM (with a 10 percent down payment requirement) is added to the equation, about 60% of today’s loans would be eliminated – but remember that we don’t have the QRM standards yet. “The combined impact of QM and QRM is that only 25 percent of purchase originations would meet the eligibility requirements of the QM rule’s safe harbor,” according to CoreLogic. And let’s not forget that for the next seven years, loans that meet the underwriting requirements of the GSEs and the Federal Housing Administration (FHA) are exempt from the new guidelines. “The irony of the exemption is that it reinforces the role that the GSEs play in the market, making it harder to enact GSE reform,” CoreLogic stated in its report.
* After some slicing and dicing of refi data, Freddie Mac observed that 27% of borrowers who refinanced in Q4 2012 chose to shorten their loan terms. According to the GSE’s Quarterly Product Transition Report, 69% kept the same term as the loan that they had paid off. In addition, borrowers who lived in lower-priced metros last year were generally more likely to shorten their term compared to borrowers in high-cost markets.
Be sure to join NTXAMP on March 21st for a QM/QRM Update.
See the full article via Who Owns 10,000 Houses? Finance Industry and Cybersecurity; QM’s Impact on Volumes 7 Years from Now.
The December Mortgage Monitor report released by Lender Processing Services and covering performance data for the full 2012 calendar year, found that while mortgage delinquency rates remained at elevated levels, they have shown steady improvement, ending the year 32 percent lower than the January 2010 peak. Additionally, following a year of regional improvement in foreclosure inventories (marked by stark contrasts between judicial and non-judicial foreclosure states), the national foreclosure inventory rate began to decline toward the end of 2012 from historic highs experienced during the crisis.
