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Highlights
- The non-QM share of originations shrank to just 1.2% of production in the 1st quarter from 1.8% in the 4th.
- Willingness to originate non-QM loans rose for the first time in a year while a willingness to originate high-quality prime mortgages grew at a slower rate and rebuttable presumption slid. The share of lenders offering high quality, prime was little changed while those offering non-QM and rebuttable presumption eased modestly.
- The share of respondents that indicated an improvement in investor demand for nonQM loans surged to 37.5%.
- Over the next six months, respondents expect better access to credit for non-QM, rebuttable presumption and lower credit score borrowers as well as increased demand from investors for these same mortgages. Little change was expected for high-quality prime loans.
- The share of respondents that indicated having had an issue closing a loan due to some facet of the ATR/QM rule fell to 33.3%, its lowest on record. However, the share of respondents utilizing overlays ahead of the 3% cap peaked at 33.3%, while overlays on other facets of the QM rule eased.
- Survey participants reported that 4.5% of their lending was impacted by the 3% cap. The bulk of issues were created by including LLPAs and affiliated services (e.g. title insurance) in the 3% calculation.
- Roughly 90% of respondents reported spending time and money to implement the new TRID documentation, while 60% have unanswered questions.
- Two-thirds expect the TRID implementation to delay some closings and 26.7% expect delays and some deals not to close at all.
- While roughly half of lenders report being asked to indemnify the FHA for a loan since 2009, two-thirds indicate that this policy impacts their willingness to originate lower FICO loans and that their concern about indemnifications is on par with their concern about GSE buybacks.
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