January 10, 2013
The CFPB has released the final rules relating to ability-to-repay and Qualified Mortgages. The CFPB’s Summary is currently available.
The big news is that qualified mortgages do NOT have a minimum down payment requirement. This was a very big bone of contention during the proposed rulemaking process (which I discussed here and here).
It is also very interesting to see that the CFPB has taken the position that a total debt-to-income ratio of 43% is the maximum that is generally sustainable for homeowners. This was a bone of contention in the FDIC’s workout of the IndyMac mess during the early years of the crisis, which I had addressed a bit here at page 807. 43% is on the high side of earlier estimates of what is sustainable, so it will be interesting to see if future default data confirms the wisdom of this position.
The rules take effect a year from now.