- What are the requirements for a loan to qualify under the Qualified Mortgage safe harbor rules?
- Why did the regulator find it desirable to provide a safe harbor?
- What are the likely costs of compliance with the safe harbor rule?
- Which loans are exempt from the Qualified Mortgage rule?
- What incentives will the exemptions create?
What are the requirements for a loan to qualify under the Qualified Mortgage
safe harbor rules? Why did the regulator find it desirable to provide a safe harbor? What are the likely costs of compliance with the safe harbor rule? Which loans are exempt from the Qualified Mortgage rule? What incentives will the exemptions create? 1. Fannie/Freddie guarantee structure
In an SEC filing, Fannie helpfully provided a graphic illustration of how its
guarantees of residential mortgage-backed securities work. (Freddie has a similar
model): 2. Credit card debt and QM DTI ratio.
The projected monthly payment on credit card debt is counted toward debt for
purposes of determining whether QM's 43% debt-to-income ratio test is satisfied. At least that's true under the hot-off-the-presses 4/13 proposed reg revisions (pp.
78-79). The reg assumes a 5% monthly payment on credit card debt and other
revolving credit (including home equity lines of credit [HELOCs], which are
counted for first mortgage QM purposes, even though they themselves are exempt
from QM). 4. Projected Income for New Job.
a. Projected income is acceptable for qualifying purposes for a consumer
scheduled to start a new job within 60 days of loan closing if there is a
guaranteed, non-revocable contract for employment.
b. The creditor must verify that the consumer will have sufficient income
or cash reserves to support the mortgage payment and any other obligations
between loan closing and the start of employment. Examples of this type of
scenario are teachers whose contracts begin with the new school year, or
physicians beginning a residency after the loan closes.
c. The income does not qualify if the loan closes more than 60 days before
the consumer starts the new job.
III. CONSUMER LIABILITIES:RECURRING OBLIGATIONS
1. Types of Recurring Obligation. Recurring obligations include:
a. All installment loans;
b. Revolving charge accounts;
c. Real estate loans;
e. Child support; and
f. Other continuing obligations.
2. Debt to Income Ratio Computation for Recurring Obligations
a. The creditor must include the following when computing the debt to
income ratios for recurring obligations:
i. Monthly housing expense; and
ii. Additional recurring charges extending ten months or more, such as
a. Payments on installment accounts;
b. Child support or separate maintenance payments;
c. Revolving accounts; and
b. Debts lasting less than ten months must be included if the amount of the
debt affects the consumer?s ability to pay the mortgage during the months
immediately after loan closing, especially if the consumer will have limited
or no cash assets after loan closing. Note:
Monthly payments on revolving or open-ended accounts, regardless of the
balance, are counted as a liability for qualifying purposes even if the account
appears likely to be paid off within 10 months or less.
3. Revolving Account Monthly Payment Calculation. If the credit report
shows any revolving accounts with an outstanding balance but no specific
minimum monthly payment, the payment must be calculated as the greater
a. 5 percent of the balance; or
Note: If the actual monthly payment is documented from the creditor or the
creditor obtains a copy of the current statement reflecting the monthly
payment, that amount may be used for qualifying purposes.
4. Reduction of Alimony Payment for Qualifying Ratio Calculation. Since
there are tax consequences of alimony payments, the creditor may choose to
treat the monthly alimony obligation as a reduction from the consumer?s
gross income when calculating the ratio, rather than treating it as a monthly
This question was answered on: Sep 18, 2020
Buy this answer for only: $15
This attachment is locked
We have a ready expert answer for this paper which you can use for in-depth understanding, research editing or paraphrasing. You can buy it or order for a fresh, original and plagiarism-free copy from our tutoring website www.aceyourhomework.com (Deadline assured. Flexible pricing. TurnItIn Report provided)
Pay using PayPal (No PayPal account Required) or your credit card . All your purchases are securely protected by .
About this QuestionSTATUS
Sep 18, 2020EXPERT
GET INSTANT HELP/h4>
We have top-notch tutors who can do your essay/homework for you at a reasonable cost and then you can simply use that essay as a template to build your own arguments.
You can also use these solutions:
- As a reference for in-depth understanding of the subject.
- As a source of ideas / reasoning for your own research (if properly referenced)
- For editing and paraphrasing (check your institution's definition of plagiarism and recommended paraphrase).
NEW ASSIGNMENT HELP?
Order New Solution. Quick Turnaround
Click on the button below in order to Order for a New, Original and High-Quality Essay Solutions. New orders are original solutions and precise to your writing instruction requirements. Place a New Order using the button below.
WE GUARANTEE, THAT YOUR PAPER WILL BE WRITTEN FROM SCRATCH AND WITHIN YOUR SET DEADLINE.