Comment on For those needing mortgages, 2 fresh ideas

After the crisis, it was hard to get a mortgage that wasn’t government guaranteed, although in the past year the market for jumbo loans that exceed the government’s dollar limits has come back to life. Under federal rules that took effect this year, lenders generally must look at borrowers’ income and assets and make sure they have an ability to repay. Lenders who go a step further, and make what is known as a qualified mortgage, get certain legal protections if people sue them, claiming they made an unaffordable loan. The borrower’s debt payments, including the mortgage and other debts, can’t exceed 43 percent of monthly pretax income. RPM’s new “tailored line of products” is designed mainly for people who have “great credit, great reserves,” but can’t get a qualified mortgage, generally because their debt exceeds 43 percent of income, says Rob Hirt, RPM chief executive. Hirt says a “very, very large institutional investor,” a money management firm he would not identify, “sought us out and said we really believe in (non-qualified mortgages) if we can define what those loan parameters will be.” “The rates are in the mid-4s and will reach as high as 6 percent depending on the loan program type, the borrower’s assets, equity in the home and credit score,” Hirt says. RPM is willing to forgo the legal protections a qualified mortgage provides because “these are smart loans to qualified individuals who don’t fit in a (qualified-mortgage) box.” The other new mortgage, called the Wealth Building Home Loan, is a 15-year mortgage designed to help low- and middle-income borrowers build equity faster than they can with a 30-year loan. A subsidized version is being offered through NACA, a progressive nonprofit that has leaned — heavily at times — on banks to increase lending in low-income communities. For two decades, NACA has offered 30-year loans with no down payment, points, closing costs or mortgage at competitive rates.