Published: September 24, 2019 | Updated: October 4, 2019

Lenders ask feds to change mortgage rules

Four leading mortgage lenders are among a coalition calling on the Consumer Financial Protection Bureau to change the Ability to Repay/Qualified Mortgage rule, Housing Wire reported.

The bloc of lenders wants the CFPB to do away with the debt-to-income ratio requirement.

The rule was enacted after the financial crisis. It requires lenders to verify a borrower’s ability to repay the mortgage before lending them the money. The rule stipulates a borrower’s monthly debt-to-income ratio cannot exceed 43%, though that condition does not apply to mortgages backed by FHA, the VA or the Department of Agriculture. Fannie Mae and Freddie Mac don’t have this requirement, known as the QM Patch. What’s more, loans sold to Fannie or Freddie are allowed to exceed to the 43% DTI ratio.

Some contend that gives Fannie and Freddie an unfair advantage, as loans sold to them don’t have the same rules as loans backed by private capital.

The QM Patch is set to expire in 2021. The group of mortgage lenders is calling on the CFPB to make other changes to the QM rule as the QM Patch fades away.

Last week, Wells Fargo, Bank of America, Quicken Loans and Caliber Home Loans joined with the Mortgage Bankers Association, the American Bankers Association, the National Fair Housing Alliance, and others in a letter to the CFPB imploring the agency to eliminate the 43% DTI cap on prime and near-prime loans.

The QM Patch, industry data shows, accounted for 16% of mortgage originations last year, covering $260 billion in loans.

The lenders’ argument is the rules limit borrowers’ mortgage options. The group contends removing the DTI cap will allow for a responsible expansion of lending practices.

Removing the DTI cap would also keep lenders on track with the country’s changing demographics.

“Elimination of the DTI requirement for prime and near-prime loans would preserve access to sustainable credit for the new generation of first-time homebuyers in a safe and sustainable way and in accordance with the fundamental ATR requirements,” the group writes.

Annual losses due to cyber attacks are expected to hit $6 trillion by 2021, a new study suggests, with cybersecurity spending projected to exceed $1 trillion for the five years leading up to 2021. (The annual gross domestic product of Great Britain is nearly $3 trillion, or half the anticipated cyber losses; the United States’ GDP is $21 trillion).

“The reputational crisis resulting from an attack can erode a company’s market value, destroy brand loyalty, limit companies’ digital transformation efforts and even lead to a credit-rating downgrade,” commerical insurance broker Aon said in its report, citing data from Cybersecurity Ventures and first reported by Insurance Business America. “An effective cyber resilience strategy can help mitigate both immediate and long-term financial losses.”

“Some companies still don’t fully understand the impact a cyberattack can have on a business,” Aon risk consultant Onno Janssen said, “Understanding the worst-case scenarios and their impact to a business is crucial to developing an effective resilience strategy in which cyber is managed as an enterprise-wide risk across the entire organization. The cyber threat is amorphous, and the technology it exploits is advancing at a dizzying pace, so the risk landscape is never going to stand still.”