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QM/ATR is just two days away and we all know things will not be perfect.  So that means some loans are going to fall out of the QM bucket.  Many have done their best to interpret regulation that can be cryptic at times.  They have also worked with their technology vendors to increase efficiency and catch issues.  Unfortunately, this is unlike any regulation we have seen before.  We can either get it right or get it really wrong on a lot of loans. Ultimately we will not know for sure until the loans start to hit the market. Plan B will help ease the pain a bit!

_____ What percentage do you believe will start out as QM and end up Non-QM?

_____ Have you taken this loss provision and worked it into your corporate margin so that you can cover the costs on the Non-QM loan sales?  There are no estimates that I have seen so far, but one thing is for sure, the notes will be discounted if they are not picked up in the QM market.

_____ Do you have an outlet for “rebuttable presumption” loans?  I’ve seen quite a few lenders opening up this avenue.

_____ What plans do you have to house loans that do not get sold because of a QM issue, or until you can find a home for them?

_____ Is Your Warehouse Bank aware of your plan B and willing to work with you through this transition period?  If not, do you have other Warehouse Banks in the Queue?

_____ How will you capture what you are learning about what is working and not working, and quickly get changes implemented into your system?

While the next 6 months may be hectic, it sure will be nice when we can all get on the same page.  It has been my experience that most mortgage bankers want to do the right thing and are willing to follow the regulation.  So it is my hope that the regulators see the effort being put into this and forgive us our missteps until the lines on the regulation are much brighter!

Tammy Butler, Master CMB

Author Tammy Butler, Master CMB

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