August 29, 2013
Dear Regulatory Agency:: RE: File Number S7-14-11
To Whom It May Concern:
I urge you to align your proposed QRM rule to the QM final rule published by the CFPB in August 2013.
I was an Underwriting Manager for a Wholesale Mortgage Lending division of a mid-sized bank during 2002 through 2007. We purchased first mortgages from Brokers and Lenders in a ten state area of the Midwest. We annually purchased approximately $2- $3 Billion dollars of mortgages each calendar year.
All loans were run through either Fannie Mae's DU/DO or Freddie Mac's Loan Prospector systems.
We never experienced a disproportionately high default rate on the loans we underwrote and purchased. In fact our default rate was well below the national average.
In my 25 years in the mortgage industry I find the final rule issued by the CFPB to allow for very good risk management while allowing low to middle income families to have the ability to own a home.
The only provision of the QM rule that I do find to be somewhat restrictive is the 43% Debt to Income ratio. Geographically some areas of this country require a higher DTI in order for families to own a home. Families in these higher priced areas are accustomed to paying more of their monthly salary towards their housing expense. Some purchase less of an automobile or others don't own an automobile in order to allow them to put more income towards housing. Or use other means to afford a home.
Low down payments, high housing and total expense ratios are not the culprit of our major mortgage crisis in the recent past. Sub-Prime and Non-Traditional mortgages were the culprit. Making mortgages without documenting a Borrower's income; assets etc. is NOT prudent underwriting practices. When you fully document and evaluate a Borrower's credit; capacity and collateral you are more than able to manage the risk of mortgage lending. This principal has served us well for decades.
We should not have a knee jerk reaction to our most recent mortgage crisis. Instead it makes far more sense to establish basic, sound lending principals that do not shut out large numbers of modest and middle-income families from homeownership.
I feel the final rule for QM issued by the CFPB will accomplish this goal.
Thank you for your consideration of my comments
Mary Ann Engstrom