The Consumer Financial Protection Bureau (CFPB) has released the Ability-to-Repay rule of its new Qualified Mortgage (QM) definition, and so far, the industry has given the definition mostly praise. The definition is intended to curb reckless mortgage lending by giving lenders a legal safe harbor if they originate loans that meet the definition.
Industry reaction has been positive
While we certainly have waited quite a long time for the Consumer Finance Protection Bureau to release the definition of a Qualified Mortgage, the long-awaited terms seemed merely to reiterate present industry practices.
Note: It’s important to remember that such regulations occur to address the issues of the past, whether or not they still exist, and that, for the most part, the riskiest of mortgage products, practices and practitioners have long since been wrung out of the market. If nothing else, we won’t have to deal with a repeat of yesterday’s problems sometime in the future; by then, we’ll probably have brand new ones with which to contend.
Below is an excerpt from our latest Market Trends newsletter, an examination of the factors which caused mortgage rates to move in one direction or another the week before. The Market Trends is written each week by Keith Gumbinger, vice president of HSH.com:
Last week, the Consumer Finance Protection Bureau finally released long-awaited standards to define a “Qualified Mortgage.” For the most part, the regulation seemed merely a codification of present industry practices and so didn’t contain too many surprises.
The Consumer Financial Protection Bureau released the Ability-to-Repay rule on Thursday which is designed to both ensure that consumers have the financial security to repay their home loan in full and to put an end to what the CFPB describes as “reckless lending.”
The CFPB says the rules focuses on three main areas: Read the rest of this entry »