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

Housing and Urban Development Secretary Ben Carson (Credit: Getty Images, iStock)

HUD wants to jumpstart bank lending on low-income homes

Lenders issued the most mortgages in 14 years last quarter (Credit: iStock)

Nonbank lenders could give serious boost to cooling housing market

The number of closed sales fell by more than 14 percent year over year in the third quarter (Credit: iStock)

Low mortgage rates are killing Manhattan’s all-cash buyer

(Credit: iStock)

Despite housing market slowdown, mortgage lenders just had a great second quarter

The Daily Dirt: The dark cloud hanging over buyers

The Daily Dirt: The dark cloud hanging over buyers

Trump proposal would make getting a mortgage harder for homeowners deep in debt

Trump proposal would make getting a mortgage harder for homeowners deep in debt

Amazon CEO Jeff Bezos and Realogy CEO Ryan Schneider (Credit: Getty Images and iStock)

Everything you need to know about Realogy and Amazon’s TurnKey partnership

The trend could reverse as younger people start to enter the real estate market (Credit: iStock)

Almost 40% of homes in the US are