New rules for jumbo loans, qualified residential mortgages could make home buying more costly in 2014

Julie C. Nichols General

Inman News – Bernice Ross

On Jan. 1, 2014, a new provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act goes into effect. The “qualified residential mortgage,” or QRM, may have far-reaching effects that will lessen the number of people who ultimately can obtain home loans. Most agents and brokers have no idea what QRM is or how it will impact their businesses.

Briefly, QRM was designed to set the bar for residential mortgages and to minimize the risk that borrowers may default. It requires that debt ratios be limited to 43 percent and loan fees limited to 3 percent, and interest-only loans and negative amortization are not allowed in most cases.

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