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| This stinks !! |
Q: What's the problem?
A: Qualified mortgages (QMs) and non-qualified mortgages (NQMs).
Blame it on Dodd-Frank, CFPB, Elizabeth Warren, Countrywide, Standard&Poors, Fannie/Freddie, or "all of the above" - whatever - but, the recently approved QM/NQM rules are truly a "game-changer" in the world of mortgage lending.
A bit over-simplified but in theory, if a lender makes a QM, a strictly "by the book" mortgage, then the lender will be presumed to have made a prudent loan and will not be subject to suit if the borrower defaults. Conversely, if the lender makes a NQM and the borrower defaults, then the lender is potentially liable to severe penalties, fines, and possible regulatory sanctions for making an "imprudent" loan!
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| Duh? |
Safe harbor or confront the threat of "financial ambulance chasing" litigators?
It would appear that lots of lenders view this as a classic "Hobson's Choice" and will choose to only make QMs come January, 2014.
That's bad news for the average American working man and woman; that's too bad for many minorities, the divorced single parent, and lots of young folks....
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| Black-balling the average American family. |
The "making-ends-meet-most-of-the-time", average American family has just been handed a "flight cancelled" notice on the path to homeownership....
And, all five federal financial regulators have assured you this is not unfair discrimination in lending...
YES IT IS !!!
(... and they "d-well" know it !)
2 comments:
They have taken way one of the best tools credit unions had to be an alternative to help members. Glad our central planners are hard at work creating an American Nightmare.
Absolutely dead-on post today! There is no question that borderline borrowers will struggle getting approval in the future, and if they do, they will pay more. Those the government should be protecting the most are the ones that will be hurt the most. This is all backwards. We don't need government involvement in the mortgage market to protect consumers from the joy of home ownership, we need them to help enable home ownership.
This is all on the CFPB. What's not to like if you are the other regulators? It becomes easier to identify examination priorities because they can assume institutions that do any non-QM are inherently more risky. As an institution, the path of least resistance is to adopt QM lending only, just as we adopted "conforming" lending only years ago... The problem will come out in two forms, reduced home ownership, which is bad for society, and "disparate impact" when the numbers start to show that minorities are affected disproportionately. The regulators have once again chosen to bury their heads in the sand and ignore reality.
I've said before on this blog credit unions need global exemption from the CFPB. Now, I'm afraid that isn't enough. The CFPB already controls the entire future of mortgage lending, and they are blowing it!
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