On Jan. 10, a new rule for residential mortgages becomes effective which is intended to protect borrowers and lenders from the problems brought on by the past housing crisis. In the event the borrower defaults on the loan in which the lender originated, yet it falls under the rules, they are insulated from legal action by the borrower or investor.

Here is a snapshot of the Qualified Mortgage: Qualified Mortgage Loans

Having said that, the new rules are not a mandate, as various lenders will incur the risk for certain borrowers with strong compensating factors like substantial liquid assets and an excellent debt repayment history. So, some lenders will originate loans beyond the QM rules, especially in the jumbo mortgage and variable rate areas since default risk is much lower than the conforming segment.