Underwriting

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.

The agency’s plan to extend the "qualified mortgage" stamp of approval to more loans could help lenders that rely on alternative data and cushion the blow of other QM changes for Fannie Mae and Freddie Mac.

The new reality for investors and originators accounts for forbearances and ability-to-repay.

The Consumer Financial Protection Bureau says the proposal would increase access to credit, but consumer groups argue that it will encourage lenders to make high-cost loans while protecting them from legal liability.

Conditions have improved for the first time since November.