The Consumer Financial Protection Bureau has decided what it means for the definition of a borrowers ability to repay a mortgage loan. Effective next January the bureaus new rule requires lenders to consider income, assets, employment, payments, and credit history when they approve a loan. In short, they should have been doing what standard lending practices should have been all along. Fees shouldn’t exceed 3 percent of the loan amount and the debt-to-income ratio shouldn’t exceed 43 percent. The underlying theory of the bureau is that they need “reasonable lending criteria to grow the economy, not another drag on good people being able to get funding.”
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