More than $40 billion of jumbos originated in 2019 were non-QMs because they had DTI ratios greater than 43%. Many of the loans would be QMs if they were originated under the CFPB’s proposed QM standards. (Includes data chart.)
Some 19.2% of non-QMs in MBS were modified or delinquent as of the end of August, down 70 basis points from July. Loan performance improved even as enhanced unemployment benefits expired.
While lenders like the CFPB’s proposal to provide QM status to certain non-QMs if the loans perform well for the first three years after origination, con-sumer advocates warned of reduced protections for borrowers.
If the CFPB doesn’t address the issue, sales of modified loans could stall due to compliance concerns, according to Kasasa, a third-party service provider.
State regulators propose capital requirements for nonbank servicers; non-agency forbearance increases; Verus launches jumbo program; Angel Oak al-lows 90% LTV ratios on bank statement loans; PCMA expands into Florida; Home Diversification Corp. looking to launch second lien.
The CFPB’s proposal could drastically reduce the number of non-QMs originated while helping the non-agency market compete with the GSEs. Industry groups and consumer advocates endorse the tradeoff.
Industry groups warn that most ARMs that reset within five years of origination won’t qualify for safe-harbor status under the CFPB’s qualified-mortgage proposal.
Wells Fargo is set to issue its first expanded-credit MBS. Loans in the deal have seasoned for an average of 15 months and other issuers are prepping MBS with somewhat seasoned mortgages.
Although three big banks reduced their first-lien portfolios during the second quarter, total holdings by banks and thrifts increased. (Includes data chart.)