Industry NewsMortgage

Feds to tighten ‘exotic’ real estate loan rules

Future-Proof: Navigate Threats, Seize Opportunities at ICNY 2018 | Jan 22-26 at the Marriott Marquis, Times Square, New York

Proposed federal guidelines on nontraditional mortgage loans are too specific and overbearing in mandating underwriting standards for lenders, a major mortgage brokers' organization said Wednesday. The Mortgage Bankers Association (MBA) said it believes the guidance on exotic loans is a good idea, but criticized the proposed new guidelines, released in December by the Office of the Comptroller of the Currency, as "overly prescriptive in mandating specific underwriting standards," also saying some sections should be clarified or removed. Nontraditional mortgage loans such as interest-only and certain adjustable-rate mortgages have become popular over the last few years as soaring home prices made it more difficult for consumers to afford homes. Though such loans often served the purpose, they have come under criticism from federal officials including then-Federal Reserve Chair Alan Greenspan and the Comptroller of the Currency. In a December speech to the Consumer Federation of America...