The National Association of Realtors® has advocated for certain changes to the QM rule. These changes would allow additional flexibility for lenders to qualify borrowers under the QM safe harbor standard, which provides certain protections from liability in connection with the determination of ability to repay. Some lawmakers are even trying to delay the implementation of the new QM rules to give regulators time to address the concerns of NAR and other industry advocates.
We can all certainly agree that the lending industry needs to pre-qualify a borrower’s ability to repay their loan based on income, credit worthiness and the other factors lenders consider. Best practices were ignored in the years leading up to the housing downturn, and consequently helped contribute to the downward spiral in the housing market.
What we don’t want to see is borrowers with solid credit and a steady, verifiable income being turned down for loans because lending restrictions are too tight. Agents should prepare their buyers for the close scrutiny of this process, which will require even more specific documentation.
Buyers should always consult a trusted lender who can properly advise them of their options, as well as pre-qualify them for the loan that’s right for their situation. The earlier buyers can determine what kind of loan is best for their situation, and what they’ll need to do to qualify, the better your chances are of navigating them toward a smooth closing with no surprises.
It’s up to all of us in the industry to be informed about these important issues, and to educate our clients about them.
Margaret Kelly (CRB) is chief executive officer of RE/MAX, LLC. For more information, visit www.remax.com.