• Login
    • Client Login
    • Client Login
    • Transferee Login
  • LinkedIn
  • Twitter
  • Facebook
  • TRC Blog
TRC Global Mobility
  • About
    • Mission & Values
    • Leadership
      • Paul G. Haislmaier
      • Sean Lickver, CRP, GMS
      • Amy Kust
      • Craig Mueller, CRP, GMS-T
      • Craig Vuoso
      • Steve Townsend, CRP, GMS-T
      • Jerry Funaro, SCRP, SGMS-T
    • Corporate Citizenship
    • Affiliated Groups
    • Work at TRC
      • Current Opportunities
  • Services
    • Corporate Relocation
      • Strategic Consulting
      • Financial Services
      • Complete Program Management
      • Group Move Management
    • Domestic Relocation
      • US Domestic Service Model
      • US Departure Services
      • US Destination Services
      • US Renter Services
    • International Relocation
      • Global Service Model
      • Global Service Network
      • Global Coverage
      • Pre-Assignment Services
      • Transition Services
      • On Assignment Services
      • Repatriation Services
    • Government & Military Relocation
      • GSA Contract Holder
    • SeniorSource™ Relocation Services
  • TRC At a Glance
    • Why Choose TRC
    • Capabilities
    • Employee Ownership and You
    • Awards & Recognition
    • Testimonials
    • Clients
    • Supply Chain Network
      • Household Goods Network
      • Global Service Partners
      • Supplier Diversity
    • Global Reach
    • Frequently Asked Questions
  • Engage
    • Blog
    • Pulse Survey
    • White Papers & eBooks
    • Employee Relocation 101
    • Press Releases
    • Advertising
    • Destination Profiles
    • Relocation Conferences & Events
    • Webinars
  • ReloSource Technology
    • ReloSource for Clients
    • ReloSource for Employees
    • Domestic Relocation Policy Tool
    • International Relocation Policy Tool
  • Contact TRC
    • Media Inquiries
    • Supplier Inquiry
  • Client Login
  • Client Login
  • Transferee Login
Stay Connected with TRC
Follow TRC, join the discussion and share!
  • LinkedIn
  • Twitter
  • Facebook
  • TRC Blog
TRC Global Mobility
Blog
Blog
Home / Blog / QRM: Clarity in housing finance

QRM: Clarity in housing finance

Jerry Funaro | January 9, 2015

Clarity in housing financeIt took nearly three years, but the Qualified Residential Mortgage (QRM) rule has been finalized by the Federal Deposit Corporation, which should translate into a win-win for homeowners who are relocating.

The new rule includes a broad definition of QRM and aligns with the Qualified Mortgage (QM) standard implemented earlier in 2014. The biggest sticking point in the passage of the QRM was the high down-payment requirements that previously proposed QRM rules imposed.

Highlights of the new QRM rule:

  • Loans are generally considered qualified if the borrower’s debt-to-income ratio is 43 percent, which is the same requirement in QM.
  • There is no high down-payment requirement.

A loan must have:

  • Regular periodic payments that are substantially equal.
  • No negative amortization, interest only or balloon features.
  • A maximum loan term of 30 years.
  • Total points and fees that do not exceed 3 percent of the total loan amount, or the applicable amounts specified for small loans up to $100,000.
  • Payments underwritten using the maximum interest rate that may apply during the first five years after the date on which the first regular periodic payment is due.
  • Consideration and verification of the consumer’s income and assets, including employment status if relied upon, and current debt obligations, mortgage-related obligations, alimony and child support.

The new rule takes effect in October 2015.

How does the QRM rule help me?

The new rule sets requirements a loan must meet to be considered safe – one that is eligible to be sold to investors as part of a mortgage-backed security without the lender having to retain 5 percent of the loan amount on its books. Lenders should be able to make more loans available to consumers in addition to making the loans less expensive since there are no more risk-retention costs passed along to the borrower.

“Realtors are confident that the new QRM rule will encourage sound and financially prudent mortgage financing by lenders while also ensuring responsible homebuyers have access to safe and affordable credit,” Steve Brown, president of the National Association of Realtors (NAR) said. “The synchronization with the QM rule will provide lenders with much needed clarity and consistency as they apply the new standards to loan applications while also providing a framework to bring more competition to the secondary mortgage market.”

Brown went on to say that the NAR strongly opposed earlier versions of the rule that included 20 to 30 percent down-payment requirements. “That would have denied millions of Americans access to the lowest-cost and safest mortgages,” he added.

Background about QM and why it was needed

The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act created the Consumer Financial Protection Bureau, which wrote the rules on how mortgages are approved. All lenders must assess income, assets, credit history, other debt obligations and employment status. If lenders do not follow through on these evaluations, borrowers who cannot make their mortgage payments can contest foreclosures on the grounds that the lenders did not properly judge their financial standings and risk.

QMs offer lenders additional protection against litigation. In a QM mortgage, borrowers cannot spend more than 43 percent of their monthly pre-tax income on all debt – and that includes a home mortgage, minimum credit card payments and car loans. Borrowers will need to prove assets and income through pay stubs, bank statements and income tax returns.

Lenders have the option to offer either a QM or non-QM loan as long as they can verify that the borrower has the ability to repay the loan. One of the advantages of a QM loan is that it can be purchased or guaranteed by Fannie Mae or Freddie Mac.

How much can you afford?

If you are about to relocate and in doubt about how much house you can afford, this handy calculator can help. Just fill in a few facts, and you will instantly see your debt-to-income ratio and how much of a mortgage you can handle, great information to have before you step inside a bank.

Categories: Employee Relocation, Mortgages, Qualified Mortgages Tags: corporate relocation, employee relocation, Qualified Mortgages, relocation specialist

Stay Connected

Subscribe to our Blog

Our Mission

Drawing on more than 30 years of experience providing personalized corporate employee relocation services backed by advanced technology and thought leadership, we hope to provide fresh perspectives to our readers, as well as imaginative and resourceful advice.

Categories

Recent Posts

  • How to Become a Relocation Expert in Four Easy Steps…or Just Look Like One! February 12, 2021
  • C-Suite Executives Weigh Company Relocation, Remote Work, and Vaccinations January 28, 2021
  • International Corporate Relocation Services Best Practices: Compensation & Benefits January 16, 2021
  • How Will Employee Relocation Emerge from the Pandemic? December 21, 2020
  • Opportunities for Cost Reduction within Your Company Relocation Policy December 14, 2020

Archives

About TRC Global Mobility

Since 1987, TRC has delivered creative, cost-effective relocation and international assignment services across the United States and in more than 150 other countries around the world. TRC partners with its clients to develop competitive, best-practice relocation programs, drawing from a comprehensive range of relocation services, including U.S. home selling, home finding and consulting services and complete international relocation services. TRC’s client base represents a wide variety of products and services and ranges from startup firms to Global 1000 companies.
Top
  • Corporate Relocation
    • Strategic Consulting
    • Financial Services
    • Complete Program Management
    • Group Move Management
  • Domestic Relocation
    • US Domestic Service Model
    • US Departure Services
    • US Destination Services
    • US Renter Services
  • International Relocation
    • Global Service Model
    • Global Service Network
    • Global Coverage
    • Pre-Assignment Services
    • Transition Services
    • On Assignment Services
    • Repatriation Services
  • Government & Military Relocation
    • GSA Contract Holder
TRC Global Mobility 800.783.5337
  • LinkedIn
  • Twitter
  • Facebook
  • TRC Blog
© 2021 TRC Global Mobility,
All Rights Reserved. Privacy Policy
Synerge-marketing: Web Design CT

Stay Connected with TRC

Follow TRC, join the discussion and share!

  • LinkedIn
  • Twitter
  • Facebook
  • TRC Blog