August 20, 2014 View entire issue of ANO         Close 

Fannie Mae: 80 Percent of Lenders Avoid Non-QM Loans
The Consumer Financial Protection Bureau’s Qualified Mortgage and Ability-to-Repay mortgage regulations that took effect in January have had little impact on lenders’ strategies so far, but most anticipate a tough environment going forward, according to an Aug.14 Fannie Mae survey of 2,000 senior executives from its list of approved lenders.

The survey revealed that 80 percent of lenders said they do not plan to pursue non-QM loans, and 84 percent said that they expect at least 90 percent of their single-family mortgage originations to be considered qualified mortgages. Larger lenders, which are more secure in their ability to take on the risk of non-QM loans, were more likely to say they will expand in that direction.

Additionally, 85 percent of surveyed lenders reported increased costs for post-funding quality control activities over the last year as they work to improve the quality of mortgages, mitigate risk and prevent fraud. 

Thirty-six percent of the lenders surveyed said that they expect to tighten their credit standards as a result of QM rules, whereas only 6 percent of the lenders reported that they expect to ease their underwriting criteria.

The QM mortgage rules were mandated under the Dodd-Frank Wall Street Reform and Consumer Protection Act and require lenders to verify and consider factors that indicate consumers may not be able to repay their mortgages. Home loans with limited fees, points and restrictive loan features like no negative amortization are considered qualified mortgages.

Read a Fannie Mae analysis of the survey and see the full survey

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