Wells and Others Gear up For Non-QM Lending

With new rules defining Qualified Mortgages (QM) slatedrnto kick in on Friday at least two lenders have indicated they will make roomrnfor loans that don’t quite fit the government mandated mold.  The two, Wells Fargo and Bank of the West,rnplan to write at least some of the loans, retaining them for their own portfolios.  </p

Bank of the West, headquartered in Omaha says itrnwill continue to offer interest only loans to its customers even though thernloans fall outside the guidelines established by the Consumer FinancialrnProtection Bureau.  Paul Wible, SeniorrnExecutive Vice President and Head of the bank’s National Finance Group said in arnstatement this week, “We extensively reviewed the CFPB’s rules and foundrnthem broadly consistent with how Bank of the West has always done business. Atrnthe same time, we know that interest-only loans can fulfill the mortgage needsrnof many of our customers. Therefore, even though they do not fit the CFPB’srndefinition of a QM, we will continue to offer them as before.”</p

Wible said that the bank’s analysis confirmed itsrnbelief that a well-underwritten, interest only loan could be good for itsrncustomers and safe for the bank to hold on its balance sheet.  These loans, he said, meet the needs ofrncertain customers such as the self-employed and that the bank will continue tornrequire that such borrowers meet its prudent underwriting criteria.</p

Bank of the West, a subsidiary of BNP Paribas, hasrnassets of $65 billion and operates 600 retail and commercial banking locationsrnin 19 states.</p

On a much larger scale, Wells Fargo, the country’srnlargest home lender is reported to be readying a group to handle nothing but portfoliornloans.  Bloomberg says the bank has created “a swat team” of about 400rnunderwriters who will originate mortgages for the bank to hold.  As many as 40 percent of the loans arernexpected to be outside of new government guidelines.  </p

Bloomberg</isaid they were told by Brad Blackwell, head of portfolio lending at the bankrnthat the group will review loans that do not qualify for the safe harbor</bprotections of new CFPB rules as a way to increase lending without losingrncontrol of quality.   </p