A recent survey from the American Bankers Association (ABA) showed that 90 percent of mortgage loans made by typical banks in 2014 were qualified mortgages (QM).
Eighty percent of respondents to the 22nd annual Real Estate Lending Survey expect the mortgage servicing rules issued by the Consumer Financial Protection Bureau (CFPB) will continue to cause a reduction in credit availability. High debt-to-income levels followed by lack of required documentation was the most likely reason a mortgage loan did not meet QM standards.
“Approximately 54 percent of respondents state that regulations have a moderate negative impact on business, while 33 percent characterize the impact as extremely negative,” according to the survey.
ABA Executive Vice President Robert Davis also attributed the survey’s findings to the CFPB’s Ability-to-Repay and QM rules, adding that the Aug. 1 effective date for the Truth in Lending/Real Estate Settlement Procedures Act integrated disclosure rules (TRID) likely will not help the housing market recover.
“As expected, the Ability-to-Repay and QM rules have dampened the housing market recovery. Combine that with new mortgage disclosures, which are just around the corner, and we’ll continue to see a slow-down in what should be the ideal time to buy a home,” Davis said.
The survey found that bankers remain most concerned about compliance issues and increasing regulatory burden; 87 percent of respondents stated that regulation was having a moderate to extremely negative impact on their bank’s business. Other top concerns included economic uncertainty, the interest rate environment and community bank challenges.