Lenders Favor Little, If Any, Changes to ATR, QM Regulations
STRATMOR, Greenwood Village, Colo., said its survey of lenders on Ability-to-Repay and Qualified Mortgage regulations showed little inclination toward changing either rule.
The company’s April STRATMOR Insights said 62 percent of respondents surveyed in March favored little or no change to ATR regulations. For QM regulations, 54 percent favored little or no change.
The report, written by STRATMOR Senior Advisor Rob Chrisman and STRATMOR Senior Partner Matt Lind, said after having endured the tidal wave of regulations of the past eight years, the majority of lenders would rather leave well enough alone when it comes to lessening ATR/QM regulations.
“Industry-wide changes impact borrowers,” Chrisman said. “Future changes should be given careful consideration. It is understandable that more lenders than not don’t want to see changes to the ATR/QM rules just when they’ve figured out how to comply with rules.”
Chrisman noted even elimination of the regulations would likely require “costly changes in the processes, systems and training and lenders will have to spend more time and more money to undo what is in place. Lenders are looking for ways to keep the costs down for themselves and the borrower, not add to them.”
Lenders responding to STRATMOR ATR/QM survey estimated average investment in implementing ATR/QM regulations at $326,000, with only minor differences between Bank and Independent lenders. By lender size, lenders originating more than $5 billion invested $744,000 vs. an average of $177,000 by lenders originating less than $1 billion.
Respondents estimated ATR/QM regulations added $139 per loan to ongoing originations costs, with $44 of this additional cost recovered from borrowers through additional loan charges and fees. This means lenders absorbed net ongoing origination costs of $95 per loan.
The survey also found lenders investing more than $750,000 in ATR/QM implementation were 25 to 50 percent more likely to want a significant scale back or elimination of regulations than were lenders investing less than $250,000. It appears that the larger the investment, the larger the resentment, Lind said.
“Large lenders–those over $5 billion in originations–were far more dissatisfied with the time available for implementation than smaller lenders,” Lind said.
More on the survey can be found at http://www.stratmorgroup.com/wp-content/uploads/STRATMOR-Insights-April-2018.pdf.
