![]() To do this, lenders review assets, employment, credit history, and monthly expenses. The Ability To Repay Rule (ATR) requires a lender to make a reasonable, good-faith determination of a consumer’s ability to repay a residential mortgage loan according to its terms. Consumers now have even more protection than ever. In 2010, the Dodd-Frank Wall Street Reform Act was passed to enhance Reg Z in response to the mortgage meltdown. ![]() Non-QM mortgages must adhere to the same Regulation Z (Reg Z) requirements that conventional loans do. Non-QM loans are a perfect solution for these borrowers. These types of borrowers do not qualify for conventional mortgages. For example, a borrower may have a 700+ FICO credit score but are self-employed or a high debt to income ratio or a recent credit blemish or a borrower with a high net worth who writes off most of their tax obligation. There are many borrowers who fall outside of traditional underwriting guidelines, but they are strong candidates for homeownership. Non-QM loans are a great solution for brokers to consider in helping those customers qualify for loans they otherwise would be excluded from under conventional underwriting guidelines. Let me start with the elephant in the room, they are not the same thing as subprime loans. Today, non-Qualified or Non-QM loans are growing in popularity, but there’s some confusion about what they really are. ![]()
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