Non-QM Lending: Top 3 New Mortgages
Have you heard of a Non-QM Mortgage? A relatively new term spawned by the reform following the real estate crash in the late 2000s, it stands for Non-Qualified Mortgage. What is it? To answer, it’s better to start by defining a Qualified Mortgage.
After the financial crash in the late 2000s, lenders were (finally) required to be more responsible when giving out mortgages. An organization called the Consumer Financial Protection Bureau (CFPB) was created, and a string of laws were put into place. One rule in particular, the Ability to Repay (ATR), required lenders to prove that borrowers could repay the loan being given.
Since lenders were scared stiff about how to pass ATR, the CFPB also provided guidelines as an example of loan underwriting procedures which would comply. Mortgages underwritten with these example guidelines are called Qualified Mortgages (QM). They “qualify” to be deemed as complying with the Ability to Repay rule.
Long story short: If a lender qualified a customer using QM guidelines and were subsequently sued for originating a loan when they shouldn’t have (based on a customer’s ability to repay), courts are likely to assume ATR was indeed met and dismiss the lawsuit.
Non-QM lending relies on guidelines created by the lender, which are expected to pass the Ability to Repay rule. Remember, QM loans use guidelines provided by the government as an example of how to pass, not the only way to pass. Responsible lending comes in many forms.
Examples of QM Loans: FHA, VA, Conventional
Top 3 Non-QM Loans:
1. Bank Statement Mortgages for self-employed / 1099ers
2. Asset Utilization Mortgages for people with large savings
3. Rental Income Mortgages for real estate investors
You can learn more about Non-QM Lending here.
Feel free to call Stephen Nassrah, owner of Nile Mortgage: 803-320-4209 www.nilemortgage.com