‘To QM or non-QM’ asked of webcast attendees

March 11 webcast
Steve Van Beek, Andy Keeney and Barry Stricklin discussed the ability-to-repay and qualified mortgage rules with credit union attendees during Tuesday's webcast.

March 12, 2014 – Credit unions that tuned into Tuesday’s NAFCU webcast received a list of eight underwriting factors they must address in determining a borrower’s ability-to-repay and some items to consider before writing a qualified or non-qualified mortgage.

Webcast panelists Andy Keeney, a partner at Kaufman & Canoles, Barry Stricklin, vice president of real estate lending at Tower FCU, and Steve Van Beek, of Howard & Howard Attorneys PLLC and former vice president of regulatory compliance for NAFCU, said credit unions should consider the following for ability-to-repay:

  • current or reasonably expected income or assets;
  • current employment status;
  • the monthly payment on the covered transaction;
  • the monthly payment on any simultaneous loans;
  • the monthly payment on any mortgage-related obligations;
  • current debt obligations, alimony and child support;
  • the monthly debt-to-income ratio or residual income; and
  • credit history.

“Beyond the magic eight, you’ll hear the magic number of 43 percent debt-to-income ratio,” said Keeney, referring to the requirement that the QM standard for the borrower is to have a debt-to-income ratio that is less than or equal to 43 percent.

Van Beek added that before deciding to offer a qualified or non-qualified mortgage loan, credit unions should address legal risks, impact on volume, impact on loan process, impact on membership, impact on balance sheet, credit risk/historical performance, opportunity and confidence in ability to comply with ability-to-repay.

 

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