Speaking to the National Association of Realtors (NAR), Consumer Financial Protection Bureau (CFPB) Director Richard Cordray said the new mortgage regulations that take effect today, Jan. 10, 2014 will protect consumers from the type of risky loan products that contributed to The Great Recession and housing bubble. Reminding NAR members of their responsibility to, and proximity with, consumers, he said, “The Ability-to-Repay rule is straightforward. It provides strong new consumer protections while preserving needed access to mortgage credit.” And this: “Those lenders that have long upheld strong underwriting standards have little to fear from the Ability-to-Repay rule. Qualified mortgages cover the vast majority of loans made in today’s market.” The borrower cannot have a debt-to-income ratio greater than 43 percent to qualify for the QM rule, and the mortgage cannot have features that allow negative amortizing requiring the borrower to pay more each month than the month before.
In response, the NAR, while welcoming the more transparent lending environment, said the three percent cap on points and fees unfairly discriminates against real estate affiliated lenders. At a panel discussion following Cordray’s talk, Jeff Kibbey of Century Mortgage Company said the new rule would reduce lending by ten percent. Ann Schnare, principal at AB Schnare, LLP said some of the guidelines do not allow for flexibility that may be needed for future generations as the lending market changes. Lawrence Yun, NAR’s chief economist noted access to credit is a huge issue in the site-built homes industry, and as MHProNews understands so well, in the manufactured housing industry as well. Barry Zigas of the Consumer Federation of America (CFA) said the ability-to-repay a loan will now be the most important factor in determining whether loan goes through.
