Community Associations Institute (CAI) is studying the long-awaited federal Qualified Mortgage (QM) standards published Jan. 10 by the Consumer Financial Protection Bureau (CFPB). The new guidelines, required by the Wall Street Reform and Consumer Protection Act (commonly known as the Dodd Frank Act), establish minimum requirements for all mortgage loans.
As anticipated, the QM standards consider association assessments a key factor when determining if a borrower is qualified for a mortgage. Ensuring borrowers can afford to pay association assessments will strengthen common-interest communities and help prevent foreclosures.
"The ability-to-repay standard will ensure home buyers are able to fulfill all financial obligations related to owning their home—including their association assessments," said CAI Chief Executive Officer Thomas M. Skiba, CAE. "This will create a greater degree of financial stability for community associations, while helping to ensure fairness and equity for all owners in a community."
Under the QM standard, lenders are required to prove borrowers have the financial resources to pay mortgage principal and interest, insurance premiums, property taxes and association assessments. 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 mortgage payments will face stiff penalties and fines.
Lender documentation of association assessments and special assessments required to meet the new ability-to-repay standard will be a key issue for CAI members. CAI will continue to work with CFPB and the banking industry to ensure that all parties understand the role played by community associations to provide lenders with assessment information in a reasonable and cost-effective manner.
Key features of the QM standard include:
CAI is reviewing the final QM standards and will provide additional perspective once a full analysis has been completed. See the summary documents provided by CFPB.
With more than 32,000 members dedicated to building better communities, CAI works in partnership with 59 domestic chapters, a chapter in South Africa and housing leaders in a number of other countries. CAI provides information, education and resources to community associations and the professionals who support them. CAI’s mission is to inspire professionalism, effective leadership and responsible citizenship—ideals reflected in communities that are preferred places to call home. Visit www.caionline.org or call (888) 224-4321.
MEDIA CONTACT: Blaine TobinPhone: 703-970-9235