John Podvin in How Will the CFPB’s New Mortgage Rules Impact the Market?


Starting in January of 2014, the mortgage market could be in for some major changes. In an effort to protect consumers, the Consumer Financial Protection Bureau has issued final rules for a qualified mortgage (QM), providing safe harbor for lenders who issue such mortgages. Mortgages that don't qualify could expose lenders to lawsuits from borrowers. We asked a panel of attorneys to address the following question.

“How will the Consumer Financial Protection Bureau’s new final rule on qualified mortgages - including the requirement that lenders ensure that borrowers have the ability to repay their loans - impact the mortgage market? ”

The reality of this rule will likely be that if a borrower does not fit within the box of a qualified mortgage, then the cost of credit will be much higher, if that person can find a lender who will lend the money. The QM rule is just one of several rules that need to be digested and integrated (some of them have not been finalized yet) in order to understand the full impact on the mortgage market. Once all these rules are finalized, institutions will need to look at the costs versus the benefits of offering mortgages and servicing mortgages in the new environment and make informed business decisions concerning whether and to what extent they should continue making residential mortgage loans in a profitable manner.
John Podvin, Haynes and Boone, LLP

Excerpted from, February 5, 2013. To view full article, click here.

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