Non-QM Loans

Following the most recent housing crisis, the Dodd–Frank Wall Street Reform and Consumer Protection Act was created and mandated minimum standards for mortgage approval including the Ability to Repay rule and a Qualified Mortgage definition.  This definition applies mainly to loans originated by government agencies such as Fannie Mae, Freddie Mac and FHA.  

Many lenders have started to originate loans outside of the Qualified Mortgage standards and these loans do not enjoy the liability protection of Qualified Mortgage (QM) loans.  These Non Qualified Mortgages are more liberal and allow borrowers to qualify for a mortgage without the traditional standard documentation requirements required for Qualified Mortgages.  However, they usually require a larger downpayment and have higher interest rates to compensate for the additional risk associated with the absence of liability protection.  Programs include the following;

• 12 and 24 month bank statements for income verification
• CPA provided profit and loss for income verification
• Stated income for investment property mortgages
• No income and no ratio mortgages
• Asset utilization including checking, savings, stock and bond portfolios and retirement accounts for income qualification
• Reduced bankruptcy/short sale/foreclosure waiting periods