Changes to 'Ability-to-Repay' mortgage rule lauded by industry, consumer groups

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Modifications to new mortgage rules scheduled to take effect next year are being welcomed by both mortgage bankers and consumer advocates.

The Consumer Financial Protection Bureau said the amendments to the “Ability-to-Repay” rule will exempt certain nonprofit and community-based lenders who work with low- and moderate-income homebuyers, while facilitating lending by small creditors including community banks and credit unions that have less than $2 billion in assets and make 500 or fewer mortgage loans a year.

The Center for Responsible Lending said the final rules “strike the right balance,” by prohibiting mortgages with higher fees from being classified as a “qualified mortgage,” while tailoring standards for small lenders who hold home loans in their portfolios.

The Mortgage Bankers Association issued a statement saying it was “particularly pleased” at adjustments made to accommodate small lenders, along with a stipulation that compensation mortgage brokers and lenders pay to loan originator employees does not count toward the points and fees threshold.

“While obviously there is more we would have liked to have seen done, particularly around the points and fees calculation, I think today’s announcement shows that the bureau is trying to appropriately balance consumer protection with access to affordable credit for qualified borrowers,” MBA CEO David Stevens said in a statement. Source: consumerfinance.gov.