Under the QM standards, lenders are required to prove
borrowers have the financial resources to pay mortgage principal and interest,
insurance premiums, property taxes and association fees. Lenders that
extend mortgage credit without fully documenting a borrower’s income and assets
and ensuring the borrower has the ability to make all monthly payments will face
stiff penalties and fines.
Fortunately, the QM standards consider community
association fees as a key factor when determining if a borrower is qualified
for a mortgage. Ensuring borrowers can afford to pay association fees will lead
to stronger communities and prevent foreclosures.
Hopefully, these guidelines will create a greater degree
of financial stability for community associations. However, lenders will have
one year to implement the safeguards, with compliance being mandatory in
January of 2014.
Lender documentation of association fees and special
assessments required to meet the new ability to repay standard will be a key
issue for our clients. It is very important for community associations to
provide lenders assessment information in a timely manner.
