Consumer advocates and lenders are joining forces to try to revamp or eliminate a key part of the Consumer Financial Protection Bureau's "qualified mortgage" rule establishing underwriting standards for most of the housing market.
Lenders fear the market will take a major hit under an agency plan released last month that would end an exception to QM given to loans bought by Fannie Mae and Freddie Mac. Under current rules, the CFPB requires lenders to verify a borrower's ability to repay a loan by giving protections to QM loans with certain features such as a 43% debt-to-income ratio. But that requirement was never fully implemented because the CFPB granted an exemption from the DTI limit if Fannie and Freddie bought the loan.
