Shift on Nonconforming Mortgages
Some of the nation's largest banks will offer loans that don't conform to new gold-standard lending definitions under sweeping mortgage regulations set to take effect next month. Executives at Wells Fargo said the bank will make some loans that don't meet the definition of a "qualified mortgage," a new designation that allows banks to demonstrate they have met requirements ensuring borrowers can afford their mortgages. JPMorgan Chase, Bank of America and Citigroup are also likely to make some loans that fall outside of the standard, according to bank representatives, although the loans are likely to be limited to affluent bank customers. While lenders aren't barred from making loans that fall outside the "QM" rules, they could face greater legal liability on those mortgages. Mortgage investors are also much less likely to purchase those loans. Wells Fargo said it has opted to continue providing mortgages that don't meet the safer legal standard because recently originated loans that don't satisfy the QM criteria have had very few defaults.
From "Shift on Nonconforming Mortgages"
Wall Street Journal (12/03/13) Timiraos, Nick
Some of the nation's largest banks will offer loans that don't conform to new gold-standard lending definitions under sweeping mortgage regulations set to take effect next month. Executives at Wells Fargo said the bank will make some loans that don't meet the definition of a "qualified mortgage," a new designation that allows banks to demonstrate they have met requirements ensuring borrowers can afford their mortgages. JPMorgan Chase, Bank of America and Citigroup are also likely to make some loans that fall outside of the standard, according to bank representatives, although the loans are likely to be limited to affluent bank customers. While lenders aren't barred from making loans that fall outside the "QM" rules, they could face greater legal liability on those mortgages. Mortgage investors are also much less likely to purchase those loans. Wells Fargo said it has opted to continue providing mortgages that don't meet the safer legal standard because recently originated loans that don't satisfy the QM criteria have had very few defaults.
From "Shift on Nonconforming Mortgages"
Wall Street Journal (12/03/13) Timiraos, Nick
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