The WJB-ONE program was revolutionary when it was launched in 2014. A WJB representative explained that the program was meant to contrast with the actions of the regulators in instituting Qualified Mortgages (“QM”), which required that lenders ensure their borrower’s ability to repay (“ATR”) before approving them for loans. The company had additional WJB-ONE programs in the works, including one which would loan large amounts of money for investment real estate, another for those customers with high-net-worth and liquid assets, and yet another aimed towards second-home owners looking to pull cash out of a refinance.
Qualified mortgages had been a massive regulatory consideration for WJB, one that had required a substantial amount of time and effort. WJB’s strategy was to gain mastery of compliance rather than become a “victim” of it. The program would be introduced incrementally, to fulfill the company’s obligations to its borrowers and lenders. Despite this optimistic outlook two years ago, WJB became too comfortable with approving applicants that would not qualify under QM, even if that required the company to put “some skin into the game.”
Lenders in the high cost loan market should definitely make sure that they are in compliance with the federal regulations. Failing to comply with the regulations can lead to fines, lawsuits, and in WJB’s case, a complete shutdown of business. Lenders are flustered by the new and confusing TRID rules, causing them to err on the side of caution and not take on loans that have even minor correctable errors. The good news is that there is light at the end of the tunnel as CFPB is now aware of these issues and how they could be affecting the market. The CFPB has begun to issue letters and assurances regarding the confusion surrounding the new regulations. The only thing that lenders can do is be patient in this time of regulatory confusion and be sure to check everything twice.
For more information on this topic, please contact Jaspreet Kaur for a free consultation or call our main office at (949) 298-8050.