june 2014 qm mortgage originators survey
TRANSCRIPT
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8/10/2019 June 2014 QM Mortgage Originators Survey
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2n
Su
M
vey
rigi
nd
NAR
Jun
of
nat
FH
ese
e
20
or
rs:
Tr
rch
4
ga
nds
e
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ExecutiveSummary
Themortgagemarketwasbuffetedbyanumberofchangesin2013and2014
amongthemhigherfeesattheFHAandchangestounderwritingasrequiredby
theAbility
to
Repay
and
Qualified
Mortgage
Rules.
This
survey
queries
asample
ofmortgagelendersabouttheimpactoftheQMrulethreemonthsafter
implementationinadditiontoquestionsabouttheimpactofchangestotheFHA
program.
HighlightsoftheSurvey
NonQM
lending
accounted
for
1.6%
of
production
by
respondents
in
this
sample
and
8.3%wererebuttablepresumption.
Anencouraging73.7%ofrespondentsindicatedthattheyhadfullyadaptedtothenew
rules,wellaheadofexpectationsreportedbyrespondentsintheJanuarysurvey.
Investorpreferencesareimportant. 68.4%ofrespondentsindicatedthattheydidnot
producenonQMloansbasedoninvestorspreferencesandasurprisinglyhighly50%
indicatedareluctancebyinvestorstopurchaserebuttablepresumptionQMloans.
NonQMlendingwasrestrictedtohighbalanceand/orhighqualitylending.
SinceJanuary10th,nearlyhalfofrespondentsindicatedtheyhadsomeissueclosinga
loandue
to
the
ATR/QM
rule.
Forloansthatdidnotmeetthe3%caponpointsandfees,themostcitedmethodfor
handlingthemwastoreducethefees,butsecondwasnottooriginatetheloan.
Financingfeeswastheleastfrequentresponse.
Roughlyhalfofrespondentsdidnousebuffersaheadofthe3%cap,43%DTI,or
rebuttablepresumptionboundary,and5.3%eliminatedtheminthethreemonthssince
inception. Buybackriskandinabilitytodiscoverallinformationabouttheconsumers
abilitytorepaytheloanwerethemostoftencitedreasonsfortheuseofbuffers.
Thevastmajority,73.7%oforiginatorshaveadaptedtotherules,but22.2%of
respondentsindicated
that
they
would
not
phase
out
buffers
on
QM
safe
harbor
and
rebuttablepresumptionparametersevenoncetheyarefullyadapted.
FHAspremiumincreasesforitsmortgageinsurancesince2010andpermanentMI
policyhaveunderminedanaverageof5.7%potentialpurchaseswheretheconsumer
couldnotaffordFHAsfeesorconventionalfinancing.
Inmostcases,aconsumerfacedwiththehigherfeeschosenottobuyortoputoff
buyingindefinitelyorwereabletoqualifyforVAoraRHSloan. Conventionalfinancing
wascitednearlyhalfasoftenasanoptionandoriginatorsindicatedthatitisdecidedly
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TheQu
OnFriday
wentinto
borrower
forvaryin
lenders
amortgage
whichinc
fees,aca
products
NARsfirs
environm
behavior
Respond
presumpt
QMloans
havelimi
1Foramo
mortgage
alifiedMo
,January10t
effect. The
sabilitytor
gdegreesof
it
allows
thapplications
ludesfulldo
pof43%on
thatqualify
tSurveyof
entandthei
oforiginator
ntsindicate
ionmortgag
isinpartdu
edportfolio
reindepthdis
qmrule
rtgageRu
h,2014,ther
oddFranka
paytheirm
assumedco
m
to
minimireceivedon
umentation
hebackend
ndprepaym
ortgageOri
businesspla
intheQM/
anaverage
s. Thevast
totheprep
optionstoho
cussionofthe
leandIts
equirements
ctrequirest
rtgageandi
pliancewith
ze
and
to
buorafterJanu
ofincome,a
debttoinco
ntpenalties
inatorsqueri
ns.Thisseco
TRenviron
riginations
ajorityofm
onderanceo
ldnonQMl
newrulessee
mpact
oftheability
atoriginato
posesstiff
theabilityt
get
for
poteary10th are
setsandem
meratio,an
amongothe
edoriginato
ndsurveyis
entandthe
areof1.6%
ortgageswe
mortgageb
ans.
http://www.
torepayan
rsmakeago
enaltiesift
repayrule,
ntial
penaltieequiredtoc
loyment,a
limitations
requiremen
saboutthei
followupt
impacttoth
ornonQMl
resafeharbo
nksandcre
ealtor.org/art
qualifiedm
dfaitheffor
eydonot. T
whichisadv
s
and
litigatiomplywitht
aximumof
nthetypeo
ts.1
expectation
atshedsligh
purchasem
oansand8.3
rQM. Thel
itunionsin
icles/summar
rtgage(QM
ttoverifya
heQMrule
ntageousto
n
expenses.
eATR/QM
%forpoints
fmortgage
sintheQM/
tontheactu
arket.
%forrebutt
wshareofn
hissample
ofnewquali
rule
llows
All
ule
and
ATR
al
ble
on
ho
fied
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Respond
IntheAp
just16.7
Whenas
investors
thesame
willingto
halfofre
ofrebutt
creditris
ntsindicate
ilsurvey,73.
intheJanu
edhowthey
requiremen
assafeharb
producereb
pondentsin
blepresump
andbuyba
havingadap
7%ofrespon
rysurveywi
treatnonQ
ts,but52%d
rQMs,thes
ttablepresu
icatednode
tionloansbe
kriskthesel
tedtothere
dentsindica
hanadditio
,68.4%indi
idnotoffert
ameshareth
mptionloan
mandfromi
tweenorigin
oansposeve
gulationsfas
edbeingad
al44.4%ha
catedthatth
hembasedo
atholdthe
withjust22
nvestorsfor
atorsandin
rsussalabilit
terthananti
ptedtothe
inganticipa
eydonotof
nfirmpolicy.
inportfolio.
.2%havinga
hisproduct.
estorsmight
intheseco
cipatedinth
ewregulati
edbeingco
ernonQMl
Only5.3%t
Originators
firmpolicya
Thisdiffere
speaktothe
darymarket
Januarysur
nsasoppos
pliantbyAp
oansbasedo
reatednon
weremuch
gainstthem,
ceintreatm
differencei
forpooling.
ey.
dto
ril.
n
Ms
ore
but
ent
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Finally,o
same.
Respond
thatfitin
initialthr
indicated
mortgage
originate
pointsan
originate
spacedi
thatthey
equalto
ly22.2%ind
ntswereask
oeitherthe
echaracteri
ahigh
degre
sthatweres
mortgagesw
dfeesisam
nonQMmo
inishedasth
weremore
20. Respon
icatedthatt
edtorateth
rebuttablep
sticsdefined
eof
reluctan
lightlyovera
ithbackend
chfirmerbo
tgageswith
eborrower
likelytoori
entsexpress
eytreatedr
eirwillingnes
esumptiono
nonQMloa
eto
originat
QMbounda
DTIsbetwee
undary. The
ifferentcre
creditprofil
inateanon
edmuchles
buttablepr
stooriginat
rnonQMd
sbasedonp
e.The
next
ry. Respond
n43.1%and
nextgroupo
itprofiles.
improved
Mmortgag
reluctancet
sumptionan
mortgages
finitionsin2
roductfeatu
roupof
four
ntsindicate
45%,butno
fcharacteris
otsurprisin
ith10.5%of
toaborro
ooriginated
dsafeharbo
ithdifferen
014ascomp
restowhich
characteristi
anincrease
higherandth
ticsdealtwit
ly,reluctanc
respondents
erwithaFIC
rebuttablep
rQMloanst
characterist
aredto2013
respondents
csdealt
with
dwillingness
e3%capon
hwillingness
tolendint
evenindicat
Ogreaterth
esumptionl
e
ics
. The
to
to
is
ing
nor
ans
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18.9%of
citedopti
Whenas
responde
43.8%,in
Somelen
common
aheadof
rebuttabl
Whenas
concern
wasnota
origination.
onat7.6%o
edaboutth
ntsindicated
icatedthat
dershaveop
onthe3%ca
the43%max
epresumpti
edtheirrati
overabilityt
nissueforth
urprisingly,i
thetime.
impactofo
thatthesef
heoutsourc
tedforbuffe
pwith28.6%
imumbacke
nQM.
nal(s)forusi
odiscoverall
issamplean
ncreasingth
tsourcingaf
eswerethe
dfeeswere
saheadoft
ofresponde
ndDTIratio
ngabuffer,
aspectsoft
only16.7%
rateonthe
iliatedservic
sameasinh
higher.
eQMparam
ntsemployin
nd18%fort
4.4%indicat
eborrower
ofthesampl
loantofinan
esliketitlei
ouserates.
eters. Theu
gone. 20%
heboundary
edconcerno
sabilitytore
eindicatedli
cecharges
surance,onl
earlyhalfof
seofbuffers
fresponden
betweensa
verbuybac
payat38.9
tigationcost
astheleast
y12.5%of
respondents
wasmost
tshadabuff
eharborand
riskfollowe
. Noportf
asadriver.
ften
,
r
by
lio
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Asdiscus
Onceada
edearlier,n
pted,22.2%i
earlyathird
ntendtomai
fresponden
ntaintheirb
tshadnotad
ffers,while
aptedtothe
only5.6%wi
QMruleby
lleliminatet
prilof2014.
em.
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TheFH
TheFHA
purchase
aboutrec
decisions.
Since201
indicated
between
Whenas
higherco
buyingin
through
financing
thecosts
Lending
roleincreas
market. Int
entchanges
0,theFHAh
5.7%oforigi
aresponseo
edhowcons
sts,68.4%of
efinitely. N
AandRHS,
withprivate
while10.5%
Environm
eddramatica
issecondsu
toFHApolicy
sincreased
nationswere
1.1%to2.0
umersimpac
originatorsi
arlyasman
utonly42.1
mortgageins
indicatedtha
nt
llyinrecent
rveyoforigi
andfacetso
heratesitc
lostbecaus
and6.1%t
tedbythein
dicatedthat
originators
citedhavin
urance. Onl
tthey
had
a
earsandthe
ators,respo
ftheprogra
argesformo
oftheincre
7.0%
creaseinmo
theyhadac
oundthatth
gsuccessshi
15.8%ofor
client(s)who
agencynow
dentswere
thatimpac
rtgageinsur
seinFHAfe
rtgageinsur
lient(s)who
eirclient(s)
tingtheircli
iginatorscite
waitedto
sa
supportsal
askedaserie
ttheoriginat
nce. Onave
es. Thedistr
nceratesre
hosenotto
ereableto
nt(s)tocon
dthataclien
vefor
alarge
rgeportion
sofquestion
orsbusiness
rage,respon
ibutionclust
pondedtot
uyortoput
indfunding
entional
t(s)couldab
rdown
pay
fthe
s
dents
red
e
off
sorb
ent.
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LocalFH
policycir
borrower
inaccess
mostimp
eitherle
loanlimits
les,buthav
swithprofile
tocredit,but
acted. 88.2
sslikelyor
erelowered
notbeenac
ssimilartoF
borrowers
ofresponde
muchlesslik
inmanymar
tedupon. Su
HAborrower
ithdownpa
ntsindicated
elytoreceiv
ketsinin20
rveyparticip
siflimitsare
mentslesst
thataborro
emortgage
4. Furtherr
antswereas
reduced. Al
han5%orFI
werwithaFI
reditiftheF
eductionsw
kedaboutac
lgroupswou
Oscoresbel
ICOscorefro
HAloanlimit
rediscussed
cesstocredi
ldfaceared
ow680wou
m620to67
swerereduc
in
for
ction
ldbe
was
ed.
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8/10/2019 June 2014 QM Mortgage Originators Survey
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Finally,w
makeloa
base,onl
depends
mostwo
withouti
henaskedho
swiththelo
10.5%indic
ontheloan,
uldnotbem
.
wimportant
wdownpay
atedthatitd
butsomew
adewithout
theFHAs10
ent,highD
oesnotimpa
uldnotbe
itand26.3
0%mortgag
I,orlowFIC
cttheirchoi
adewithout
indicatedth
insurancec
Otraitscom
e. Themajo
thefullcov
attheywo
overageisfo
ontotheF
rityof36.8%
erage,21.1%
ldnotorigin
roriginators
Asborrowe
indicatedth
indicatedth
atetheseloa
to
r
tit
t
ns
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Appendix
A:
About
the
Survey
InAprilof2014,NARResearchsentoutasurveytoapanelof65differentmortgageoriginatingentities.
ThesurveyinstrumentwassentbyemailonMondaythe8thofAprilandclosedonThursday,May1st.
Questionsinthesurveyinstrumentcoveredthecharacteristicsoftheoriginators,asubsetofquestions
focusedonthequalifiedmortgagerule,andasetofquestionsfocusedontheFHA. Therewere19
unique
responses
to
the
survey
for
a
response
rate
of
29.2%
and
a
margin
of
error
of
11.1%
at
a
95%
levelofconfidence.
Muchlikethefirstsurvey,mortgagebankersdominatedthesample,butthissampleincludeda
modestlyhighershareofcreditunions. Originatorprofileswerealsosimilartothefirstsurveyinterms
ofgeographicdistribution,purchaseshare,averageannualproductionvolume,andthedistributionof
destinations/purchasersoftheoriginatorsproduction.
Questionscan
be
directed
to:
KenFears
SeniorEconomist,
Director,HousingFinanceandRegionalEconomics
TheNationalAssociationofREALTORS
(202)3831066
KennethR.TrepetaEsq.
Director
Real
Estate
Services
NationalAssociationofREALTORS
500NewJerseyAve,NW
Washington,DC20001
(202)3831294