Consumer Financial Protection Bureau May Create First-Time Standard For Qualified Mortgages, Offering A Safe Harbor For Smaller Lenders

Tuesday, October 16, 2012 06:42
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Consumer Financial Protection Bureau May Create First-Time Standard For Qualified Mortgages, Offering A Safe Harbor For Smaller Lenders

Tags: economy | mortgage debt | regulation

The financial markets are not the only focus of new regulation. Mortgage lenders, the not-so-sub-prime suspect in the 2008 financial crisis, may get a boost from federal regulators by giving them protection from certain types of lawsuits.

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The move would try to boost lending to qualified borrowers and in doing so, create what is called a qualified mortgage.
 
The qualified mortgage would create a national standard for the first time.
 
The Consumer Financial Protection Bureau is considering shielding lenders who offer these loans while limiting protection for lenders offering loans that still qualify but that carry higher interest rates.
 
The move is in answer to a battle cry from small and med-sized mortgage lenders who seek a safe harbor against larger competitors like Wells Fargo and Bank of America who can more easily absorb the risk of default.
 
Consumers back the move saying additional safeguards are needed to avoid a repeat of the lending practices of 2008. Instilling the new regulations may give investors the added confidence they need to propel the economy forward.

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