Tyler Frank,
Paramount Mortgage
NMLS ID 942420
On January 10, 2014 the mortgage world is going to go through some changes. These changes will affect consumers and their ability to qualify for a home loan. Is it doom and gloom? Not really.
A “Qualified Mortgage” or QM, is something we at Paramount Mortgage have been doing for a while. It is all about the consumer having the ability to repay the loan and verifying, to the best of our ability, through paperwork, all the facets of a loan approval. It is very possible additional paperwork may be requested from the borrower to accomplish verification going forward. Is it the end of the world? No. We as a team, agent and loan officer, need to relay that information to the client.
We, for the most part, have already been doing that.
The biggest change will be the stringent enforcement of the debt-to-income ratio at 43%. This will be strictly enforced on conventional loans. The thought is we will see tighter restrictions on government-backed financing, FHA, VA and USDA, but a higher ratio may be allowed. So If I have a buyer at 44%, I probably could go FHA.
We also think the secondary market will have an appetite for “non” QM borrowers. As an example: a borrower buying a $400,000 home with 50% down and an 800 credit score, but the ratio is at 43.5% and non-QM – well, that is a great borrower and some investor will take that chance with 50% down and an 800 credit score. Financing will evolve for this type of buyer.
Other types of financing will go away and not be available. Products such as balloon loans, forty-year amortization, negative amortization and interest-only loans will become things of the past.
About the author: Tyler is Paramount Mortgage Company’s general counsel as well as a licensed mortgage loan originator. Tyler is a 1999 graduate of the University of North Carolina at Chapel Hill where he was a member of the university’s Dean’s List. He received his J.D. from Washington University’s School of Law in 2002 and is a member of the Missouri Bar Association and the Illinois State Bar Association.
Tyler is “big brother” mentor and role model to a young man through the Big Brothers Big Sisters of Eastern Missouri. He is a member of the St. Louis Sports Commission’s Associates Board, the University of North Carolina at Chapel Hill’s Alumni Admissions Committee and Mary Institute and St. Louis Country Day’s Alumni Executive Committee. In 2012, Tyler successfully summited Mt. Kilimanjaro (19,341 ft.) in Tanzania, Africa, and ran his first full marathon.
Tyler can be reached by email at tfrank@paramountmortgage.com or by phone at 314.372.4313.
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