Dodd Frank 2014 Rules

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How will QM really affect us after January 10th?

Some portions of the rule are simply not going to affect any of us; no 40 year terms, no stated income, no interest only; those are about 6 years too late!

More important are the items which could affect new applications after January 2014, the biggest of which is ATR – Ability To Repay. Within the ATR rule, the item that stood out most was the cap on Debt-to-Income (DTI) at 43%. Now, had it not been for the 7 year reprieve that was built into the rule we may have been in trouble. The rule basically states that as long as Fannie/Freddie, FHA/VA and USDA don’t come out with their own restrictions on DTI AND you receive an Automated Underwriting System approval then the 43% DTI restriction won’t apply for the next 7 years.

Here are some of the other items that are required to ensure we have documented the borrower’s ability to repay:
•Income should be verified through a third party. Movement already orders 4506T on all files
•All debts will be considered as part of the DTI ratio.
•Assets will be verified for a minimum of 2 months.

Another items that falls under the new rules that take effect in January:
• Copy of the Appraisal must be given to the borrower 3 business days prior to closing. This rule has been in place for some time now and we still have the ability to waive the 3 day period on rush closings at client’s request.

I think it might be business as usual!

About The Author

Jolie Powell

Jolie Powell has been a distinguised leader in the Real Estate industry since 1987. Prior to entering the world of Real Estate, she worked as a TV producer for the Advertising Agency, Dancer Fitzgerald Sample in NYC. Jolie's expertise in counseling buyers and sellers brings people together from Long Island, and indeed, Globally! Having lived abroad and traveled extensively, Jolie has an excellent understanding of many cultures. As a Cuban-born American, she is fluent in Spanish and communicates well with international clients relocating to the North Shore of Long Island. Jolie is proud of the high level of trust she and her clients have established and looks forward to continue building exceptional client/broker relationships.

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