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We are all about education. There are many new laws and regulations which have defined and expanded Non- Qualified Mortgage programs with the refinement of legislation by the CFPB which created rules and liability protection which defined Qualified Mortgage QM loan standards including the Ability to Repay rules.

The Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law in the summer of 2010. The act created minimum standards for mortgages including the Ability to Repay (ATR) rule and a Qualified Mortgage definition. These rules were enhanced and guidance was issued by the Consumer Financial Protection Bureau (CFPB) in 2014. Non -QM loans were defined and include ATR with alternative income documentation using bank statements to show income, interest only, DTI above 43%, high cost loans, balloon payments, non- owner occupied, and jumbo loans to name a few. Nomura Securities reported that only $369 million of Non- QM were securitized in 2015. By 2017 that number increased to $3.9 billion. Nomura estimates origination volume to increase to over $15 billion in 2018. The Non -QM space is the fastest growing space in the mortgage industry. Wall Street analysts predict the Non- QM business to double again in 2018.

Owner Occupied Consumer loans using alternative income documentation fall inside the Dodd Frank guidelines of “Ability to Repay”. A typical borrower under this program is self-employed, has good credit, has adequate cash flow in their business or personal life, yet wants to avoid the hassle of providing full documentation and tax returns required in conventional financing.

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