|
The
changes from the Consumer Financial Protection Bureau (CFPB) are
part of a broader push by President Trump's administration to
boost affordable mortgage products by reducing lenders'
liability and compliance risk, although some consumer advocates
say the changes could hurt vulnerable borrowers.
One measure expands the definition of a general "qualified
mortgage," a category of lower-risked mortgage, by replacing the
existing 43% debt-to-income ratio limit with a price-based
limit. It also gives lenders more leeway to make "reasonable
determinations" of a borrower's likelihood to repay.
The agency has also created a new "seasoned" qualified mortgage,
which would give lenders certain liability protections after
they have held the loans in a portfolio for at least three
years. Under the new category proposed in August, a first-lien,
fixed-rate "seasoned" loan can become a general qualified
mortgage after 36 months of timely borrower payments.
"The Bureau's primary objective with this final rule is to
ensure access to responsible, affordable mortgage credit," CFPB
Director Kathy Kraninger said in a statement.
While mortgage-lending groups have praised the Bureau's efforts
to boost more innovative products, some consumer advocates have
said the changes strip away important guard-rails and make it
easier for banks to target vulnerable borrowers.
The changes come ahead of a Jan. 10 expiration of a federal
exemption that makes higher-risk mortgages eligible for purchase
by government-run entities Fannie Mae and Freddie Mac.
The CFPB has said that ending that exemption and redefining the
ability to repay will increase mortgage competition.
(Reporting by Katanga Johnson; Editing by Michelle Price and
Aurora Ellis)
[© 2020 Thomson Reuters. All rights
reserved.] Copyright 2020 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
|
|
