CFPB: Back to Basics

Today, the CFPB released a “back to basics” announcement  for homebuyers.  This message seeks to put the Ability-to-Repay and Qualified Mortgage Rule into better context for consumers in advance of its January 10th start date.  The Bureau describes this rule as a common sense policy that responsible lenders have already been following for decades, which will now be law.
 
The blog post itself was accompanied by a ‘fact vs. fiction’ document meant to “help dispel some of the most common misconceptions about what this new rule actually means for consumers."   In an attempt to assuage market fears, CFPB is addressing what they are describing as false concerns.

A few examples include the following myths:
 
Myth: Banks aren’t going to make any loans that are not Qualified Mortgages.
Truth: Roughly 92 percent of mortgages in the current marketplace meet the Qualified Mortgage requirements and some of the nation’s largest banks have already said they plan on making loans that fall outside of the Qualified Mortgage guidelines.
 
Myth: Excessive documentation requirements are going to make it nearly impossible for anyone who’s self-employed to qualify for a mortgage.
Truth: Looking at this kind of documentation is something that responsible mortgage lenders have always done, and the new rule makes sure that every lender follows prudent underwriting practices.
 
Myth: The new rule requires 20 percent or 30 percent down payments for new mortgages, which will price many borrowers out of the market.
Truth: The Ability-to-Repay Rule and Qualified Mortgage guidelines do not establish a minimum down payment.
 
Myth: Lenders haven’t had enough time to update their systems and get ready for the new rules. The CFPB has amended the rules repeatedly, making it impossible for lenders to adapt in time.
Truth: The Ability-to-Repay Rule was finalized in January 2013, a full year before it was scheduled to take effect. The CFPB has issued various amendments to ensure the effectiveness of the rules by making it easier for lenders to comply.
 
The full document can be found here and your perception of this new rule is always welcome in the comments section below.

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