Fannie Mae (FNMA)

[navycmdr]

Sen. Shelby?s Bill Includes ATR Fix for Portfolio Loans

By Thomas Ressler [e-mail]

Sen. Richard Shelby, R-AL, chairman of the Senate Banking, Housing and Urban Affairs Committee, released the text of his pending regulatory relief bill this week, which includes changes to the ability-to-repay rule.

Among other things, the Shelby measure would grant qualified mortgage status under the ATR to residential loans held in portfolio. However, certain conditions would have to apply. First, the lender/creditor would need to hold the loan in portfolio since its inception, and any entity acquiring the mortgage must continue to hold it in portfolio.

Also, the mortgage cannot have been acquired through securitization, nor can it have certain verboten features, such as negative amortization, interest-only provisions, or a loan term that exceeds 30 years.

The originator would still have to document the borrower?s income, employment, assets and credit history. For more details, see the upcoming editions of Inside Mortgage Finance and Inside the CFPB.