HUGE News for Changes for the Ability-to-Repay and Qualified Mortgage Standards

Our vision is to work for a better future for people. Because of our commitment to you and the community, we wanted to provide a brief overview of the new Ability-to-Repay and Qualified Mortgage Standards under the Truth in Lending Act. This legislation will amend Regulation Z, which implements the Truth in Lending Act and will the change way that lenders originate mortgages. NewsFlash

Freddie Marmolejo  Let’s Talk. Austin: (512) 861-6566  Dallas: (972) 535-5935   Lubbock: (806) 300-0899

Your Texas and FHA | VA | JUMBO |Reverse  nmls# 328534

Congress has established a presumption of compliance with the Ability-to-Repay (ATR) requirements for a

certain category of mortgages called Qualified Mortgages (QM). Due to the extensive requirements of these new regulations, it will likely take longer for lenders to process a mortgage. Borrowers will likely have to provide more information than in the past to lenders when applying for a mortgage.

Here are a 3 of the details you should know about the Ability to Repay (ATR) Rule:

•  Begins with applications dated January 10, 2014 and after, lenders will have to satisfy ATR requirements on

almost all closed-end residential mortgages

•  Applies to closed-end consumer credit transactions that are secured by a dwelling

•  Describes the minimum standards lenders must use to determine that consumers have the ability to repay the

mortgages they are extended

•  Provides 8 specific factors that lenders must consider (including verifications of income or assets relied on,

employment if relied on, and review of credit history)

Here is more information on Qualified Mortgage Standards:

•  Prohibits negative amortization or interest-only payments

•  Prohibits loan terms in excess of 30 years

•  Limits points and fees — the threshold is generally 3% of the loan balance, but larger amounts are allowed for

loans under $100,000

•  Some lenders will choose to only originate Qualified Mortgages, which will restrict credit to some individuals (max debt to income ratios of 43%)


For more information about Supreme Lending mortgage products, contact:

Freddie Marmolejo: NMLS# 328534

Chris Marmolejo: NMLS #205023

Supreme Lending: NMLS #2129




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