CFPB: New rules announced for mortgage loans

The Consumer Financial Protection Bureau (CFPB) has released highlights of new guidelines regarding qualified mortgages and ability-to-repay rules. The rule will take effect in January  2014. Read the full CFPB news release.

The National Association of REALTORS® hasn’t done an analysis of the proposal, yet. While there was a release, the full details haven’t been formally released for study.

Said NAR President Gary Thomas:

“The National Association of REALTORS® applauds the Consumer Financial Protection Bureau for creating a broadly defined Qualified Mortgage rule that establishes strong consumer protections while ensuring continued access to safe, affordable mortgage credit. NAR forged a coalition of partners that urged regulators to honor Congressional intent by crafting a broad QM and we are pleased that the rule encompasses the vast majority of the safe, high quality lending being done today.


We will continue to work closely with the CFPB to ensure that the cap on fees doesn’t restrict consumers’ mortgage options, but believe today’s QM rule is a positive step to bringing certainty to the housing finance system. REALTORS® urge regulators to mirror the forthcoming Qualified Residential Mortgage rule after the QM rule to ensure affordable credit remains available to qualified borrowers.”

Here are some highlights of the rule changes from the CFPB’s release when it comes to ability to pay:

  • Financial information has to be supplied and verified
  • A borrower has to have sufficient assets or income to pay back the loan
  • Teaser rates can no longer mask the true cost of a mortgage
And for qualified mortgages:
  • No excess upfront points and fees
  • No toxic loan features
  • Cap on how much income can go toward debt

“When consumers sit down at the closing table, they shouldn’t be set up to fail with mortgages they can’t afford,” said CFPB Director Richard Cordray. “Our Ability-to-Repay rule protects borrowers from the kinds of risky lending practices that resulted in so many families losing their homes. This common-sense rule ensures responsible borrowers get responsible loans.”

The HousingWire article, “QM rule released with two legal liability standards,” takes a closer look at the changes including detail on ability-to-pay standards, what constitutes a qualified mortgage and potential legal risks.

More news coverage of new mortgage rules:

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About Stephanie Sievers

Stephanie Sievers is Senior Editor for the Illinois Association of REALTORS®. She serves as Senior Editor for IAR publications including the Illinois REALTOR® magazine and all other IAR publications. She is responsible for developing content for the Illinois REALTOR® Weekly Connection e-newsletter, coordinates the IAR Twitter account content at ILREALTOR and plans and develops content for videos. She assists in developing and writing content for the IAR blog. She also is involved in researching and drafting news releases and coordinates the news media distribution database and newsclips reports for the Association. She also assists in IAR spokesperson training seminars and is involved in development of association briefing materials on issues. She assists with the housing statistics program and reports.

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