With the new upcoming qualified mortgage rules, will banks have to choose to issue either qualified mortgages or non qualified mortgages?
It doesn’t look that way.
It appears that starting in January 2014, banks will be able to issue both qualified mortgages and non-qualified mortgages. Recently, The Federal Reserve, Federal Deposit Insurance Corp and other agencies have issued various statements that say that mortgage lenders can lend both “qualified” mortgages, which are the most basic loans, and non-qualified loans without risking safety-and-soundness violations.
As the qualified mortgage rule gets closer to being implemented, banks are worried about possibly violating safety and soundness rules, and the statements seem to be targeted to ease banks’ fears about complying with new rules from the Consumer Financial Protection Bureau. The CFPB rules regarding qualified mortgages are somewhat complicated and generally require lenders to verify that borrowers can repay their mortgages.
What lenders will issue both qualified and non qualified mortgage loans? It is a little too early to tell for sure, but some of the larger lenders have come out and issued statements that they will provide both. Because the qualified mortgage definition was drawn broadly, many banks expect to primarily make qualified loans, at least at first.
If you are in the market for a mortgage and your loan officer starts talking about qualified mortgages and non-qualified mortgages, don’t worry – in January 2014, every lender will have the CFPB qualified mortgage rules to follow. The best thing you can do to get the best deal on a qualified or non qualified mortgage is to shop multiple lenders and get multiple written quotes.