Qualified mortgage rules go into effect

TRD New York /
Jan.January 10, 2014 02:30 PM

Tighter federal mortgage regulations go into effect today that place stricter caps on debt-to-income ratios, in the hopes that lenders stop originating mortgages to those who cannot repay them .

The new rules, put forth by the Consumer Financial Protection Bureau, were designed to rein in future bubbles, like the one that lead to the 2008 financial crisis.

“These simple principles will help us ensure that the mortgage market never melts down again the way it did just a few short years ago, making people’s lives miserable in the process,” CFPB director Richard Cordray said in a speech Tuesday before the National Association of Realtors, the New York Daily News reported.

Borrowers’ debt-to-income ratio must be less than 43 percent to qualify, and points and fees will be limited to 3 percent for a loan of more than $100,000, according to the News. Lenders are also required to warn borrowers when rates change in an adjustable-rate mortgage, and lenders must send a monthly statement. However, banks will be protected from future lawsuits from customers with qualified mortgages, the News said.

However the new rules could also make it more difficult for first-time home buyers to qualify, and lenders can still offer non-qualified loans, likely charging higher rates to borrowers with less credit, as the Real Deal reported. [NYDN]Angela Hunt


Related Articles

arrow_forward_ios
The number of mortgage borrowers in Covid-19 forbearance plans ticked down again this week. (iStock)

3M homeowners remain in forbearance

3M homeowners remain in forbearance
(iStock)

Older Americans increasingly saddled with housing debt

Older Americans increasingly saddled with housing debt
(Getty, iStock)

Mortgage applications to buy homes decline for fourth straight week

Mortgage applications to buy homes decline for fourth straight week
(iStock)

Black homeowners pay $13K more for home loans: study

Black homeowners pay $13K more for home loans: study
While some Americans have benefited from low mortgage rates, others find themselves locked out (iStock)

Homebuyers with bad credit increasingly locked out of the market

Homebuyers with bad credit increasingly locked out of the market
(Getty)

Has homebuying peaked? Mortgage applications sink 2%

Has homebuying peaked? Mortgage applications sink 2%
A new report by CoreLogic showed mortgage payments that are over 120 days delinquent rose to 1.4 percent in July, its highest level since 1999 (iStock)

Mortgage delinquencies jumped to highest rate in 20 years

Mortgage delinquencies jumped to highest rate in 20 years
Snapdocs CEO Aaron King (Snapdocs; iStock)

Snapdocs raises $60M amid record demand for mortgages

Snapdocs raises $60M amid record demand for mortgages
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...