The ability-to-repay rule requirement part of the new qualified mortgage rule can cause headaches for self-employed would-be borrowers, even if they have stellar credit and can put down large down payments.
Syndicated columnist Lew Sichelman offered himself as an example in an article that appeared in the Los Angeles Times.
Sichelman said he has a credit score of 760, owns four properties supported by rental agreements, and submitted tax returns for 2011 and 2012, as well as copies of his bank statements to a lender when he applied for a cash-out refinance for an amount under $100,000 with a loan-to-value ratio of just 70 percent.
His application was still rejected, however. The reason? He recently became self-employed, and cannot show he’s made enough income working in that capacity over the last two years to qualify for the loan.