Now that the Consumer Financial Protection Bureau says it will scrap an unpopular standard for so-called qualified mortgages, the big question is what will take its place.
The agency is sending a strong message that it won’t rush to end an exemption for Fannie Mae and Freddie Mac while also signaling longer-term changes that will affect all lenders.
Industry groups are calling on the consumer bureau to eliminate the debt-to-income limit for “qualified mortgages” and provide a short-term extension of special treatment for Fannie- and Freddie-backed loans.
Consumer Financial Protection Bureau Directors Kathy Kraninger is under pressure to ask a federal judge to lift a stay that has kept the agency's short-term-lending rule from going into effect.
Though advocates and industry are rarely aligned, they are starting to coalesce around a plan that would call for the elimination of the CFPB’s 43% debt-to-income limit as part of its qualified mortgage rule.
The industry has long worried that the ability-to-repay rule gives borrowers an avenue to fight foreclosure, but one plaintiff’s experience may discourage others from trying.
With the agency mulling changes to the “Qualified Mortgage” regulation, mortgage lenders say little-known standards for how they document a borrower’s income would be a good place to start.
Many in the industry say releasing GSE-backed loans from stringent underwriting rules has helped the housing market recover, but a new level of regulatory burden could reverse those gains.
The mortgage industry was caught off guard by regulators’ decision to cease special treatment for Fannie Mae and Freddie Mac in complying with underwriting rules. But how big of an impact will the new policy have?
