All Posts Tagged: ATR

Numbers Count: Weekly mortgage data highlights

Wendy Cutrufelli
Mortgage Banking

Numbers count. They matter to bankers and to prospective homebuyers, sellers, and real estate professionals. Here’s my take on the key numbers on the housing market this week.

The numbers: ATR/QM rule impacts jumbosHouses in a neighborhood

Banks said they experienced stronger demand in the second quarter for prime residential mortgages — the first uptick in demand since a year ago, according to the July Senior Loan Officer Opinion Survey on Bank Lending Practices released by the Federal Reserve Aug. 4. Also in the survey, more than half of the respondents indicated that the Ability to Repay/Qualified Mortgage rule has reduced approval rates on applications for prime jumbo home-purchase loans.

Important reasons for the lower approval rates included (1) the ATR provisions that require mortgage originators to evaluate income and to assess credit history, assets, and debt payments, and (2) the QM provision that caps the borrower’s debt-to-income ratio at 43%. Finally, more than half of the 36 respondents that originate nontraditional mortgages also indicated lower approval rates on nontraditional home-purchase loans due to the ATR/QM rule.

What counts: The jolt we got a year ago when mortgage rates jumped may be out of our system. Rates stabilized after the early 2013 rise, but the jump still put a damper on existing home sales last year and in early 2014, as the San Francisco Fed pointed out earlier this year. Jobs growth and the strengthening economy may be bringing out more buyers, which could be good news for sellers.

The second finding of the Fed survey is a reminder for prospective buyers in the market for a jumbo loan (over $417,000) to brush up on the Ability to Repay (ATR) rule and the Qualified Mortgage (QM) rule, which do limit lenders’ flexibility in approving mortgage loans, in particular nontraditional and jumbo loans. What I have stressed to borrowers and real estate agents working with prospective borrowers is just how vital having up-to-date documentation is now to help the mortgage application process go more smoothly. Lenders need documents showing income and assets early in the loan application process to verify a prospective borrower’s ability to repay.

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3 ways to tell if an interest-only mortgage may be right for you

Karen Mayfield
Mortgage Banking
Older man sitting at desk with computer and paperwork, holding one paper and looking at it while scratching his head.

These factors can help you determine if an interest-only loan is a good fit for you.

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2 more tips to help mortgage borrowers in 2014

Karen Mayfield
Mortgage Banking
Middle-aged man signing documents at table while wife looks over his shoulder.

A few important additions to a Top 10 list that can help borrowers in the 2014 home-buying season.

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The new mortgage rules: What ATR means for you

Karen Mayfield
Mortgage Banking
houses_rooftops

Part of the 2010 Dodd-Frank Act, the ATR rule was established to set minimum standards that a lender must use to determine that consumers have the ability to repay the mortgages they get.

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