Underwriting

The consumer bureau's revamp of criteria for "qualified mortgages," a special regulatory class of loans free from liability, emphasizes pricing instead of a borrower's debt-to-income ratio.

But existing deals are likely to experience issues resulting from higher defaults, faster prepayment speeds.

Whether Ginnie issuance increases in the future may depend in part on the extent to which the Biden administration wishes to tap the FHA to promote affordable housing and homeownership.

Lenders also increased jumbo product availability as well as rolling out new SOFR-indexed ARMs.

Demand trends were mixed in the third quarter, with consumers showing more willingness than businesses to take on new debt, according to the Fed’s most recent survey on bank lending practices.

The ballot measure, which would allow local jurisdictions to expand rent control, had concerned mortgage companies who worried the law would result in a patchwork of different policies that could complicate underwriting and discourage lending.

The agency confirmed that loans backed by Fannie Mae and Freddie Mac can continue avoiding debt-to-income limits as the bureau completes a revamp of the Qualified Mortgage standard.

While using the 30-day SOFR as its index, Freddie Mac structured the deal so it could shift to a one-month term if and when that rate is approved.

The Consumer Financial Protection Bureau's overhaul of its Qualified Mortgage standard is alarming free-market advocates who say it will precipitate a return to easy credit and higher defaults and could disproportionately harm minorities.

The guidelines are somewhat similar to those the Federal Housing Finance Agency established for the government-sponsored enterprise market in response to the high number of loans impacted by coronavirus-related hardships.