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

The Consumer Financial Protection Bureau wants to let the “qualified mortgage patch” expire

TRD NATIONAL /
Jul.July 26, 2019 03:10 PM
Donald Trump and Kathy Kraninger (Credit: Getty Images and iStock)

Donald Trump and Kathy Kraninger (Credit: Getty Images and iStock)

Borrowers who are deep in debt could find it even harder to get home loans under a new Trump Administration proposal.

Leaders of the Consumer Financial Protection Bureau said Thursday they plan to allow the expiration of the so-called “qualified mortgage patch,” a loophole in post-recession lending rules that lets deeply indebted homeowners take out loans, according to the Wall Street Journal.

The patch allowed Fannie Mae and Freddie Mac to back some home loans whose debt payments exceed 43 percent of the borrower’s income, which was the cap broadly set by the bureau in 2013.

The Urban Institute estimates lenders exploited the patch to extend some 3.3 million mortgages between 2014 and 2018, adding up to more than $250 billion in loans that would not have been allowed otherwise.

At a press conference Thursday, Consumer Financial Protection Bureau director Kathy Kraninger said her agency has not decided whether to adjust the rule’s debt-to-income cap once the patch expires in 2021.

Tightening the mortgage requirements is part of the Trump Administration’s larger effort to distance the federal government from home lending, in part by privatizing Fannie and Freddie[WSJ]Alex Nitkin


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