While the Consumer Financial Protection Bureau’s “ability-to-pay” rule was finalized in January – setting in place regulations that mandate mortgages be finalized in a way that promotes responsible lending and borrowing practices, changes to how nonprofit and community-based lenders will be affected were added on Wednesday, Bank Credit News reports.
Under the new provisions, lenders that assist low-income borrowers in their acquisitions of affordable housing will be able to issue balloon loans that can still be classified as qualified mortgages.
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“Today’s amendments embody our efforts to make reasonable changes to the rule in order to foster access to responsible credit for consumers,” CFPB Director Richard Cordray said, according to Bank Credit News.
With the revision in place, lenders with less than $2 billion in assets or who have made 500 or fewer first-line mortgages will be exempt from the rule. This includes cases where the borrower’s debt-to-income ratio exceeds 43 percent.
Read the full report here.
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