* Growing numbers of loans have multiple indications of serious future risk of nonpayment -- combinations of low credit scores of 640 or less and DTI ratios
that exceed 50 percent.
- Apply relaxed DTI ratios
for those who temporarily owe two mortgages before the sales of old homes, the newly-married and young adults
After all, not all borrowers with DTI ratios
of 44 and higher are created equal--and neither are all non-QM loans.
Younger families had much higher DTI ratios
throughout the time series.
The government wants to see the newly adjusted LTV and DTI ratios
help people borrow money with lower interest rates from financial institutions.
Places with the highest DTI ratios
are likely to be those with the highest prevailing home prices.
Most important: Postpone your purchase until your DTI ratios
tell you -- yes, you can afford the house you want and lenders won't reject you out of hand.
(121) Most of the negative comments were focused on the original proposal's down payment requirement, LTV ratios, and DTI ratios
. (122) Many commenters argued that the proposed QRM definition was too narrow, especially with respect to the LTV and DTI requirements, because it disadvantaged first-time homebuyers and low- and moderate-income persons.
However, borrowers with poor credit profiles (such as low-to-moderate-income households that tend to have low credit scores and/or higher DTI ratios
) may find their financing options more limited due to QM standards.
They also wouldn't commit to borrower criteria--minimum credit scores, DTI ratios
, etc.--saying instead that "We do a full analysis on the individual and make loans based on the individual.
In this section we perform an empirical analysis of the potential determinants of default identified in the previous section, including falling house prices, labor income shocks, and high DTI ratios
. Because a loan that is prepaid is no longer at risk of default, we also investigate prepayments in a competing risks framework.
Recent college graduates, saddled with large student loan debt, will also have to postpone home purchases while getting their DTI ratios
under the cap.