Underwriting

Fannie Mae should be applauded for allowing lenders to take rent payments into account when underwriting home loans. But lenders will need to embrace other credit scoring models if they hope to turn more renters into buyers.

The expanded credit access in its automated mortgage decisioning goes into effect in mid September.

The new calculation of borrowers’ monthly obligations will allow for a higher debt load from tuition, potentially opening eligibility to more Black applicants, according to public officials.

The White House directive may lead regulators to develop new mortgage underwriting standards, stress-test requirements and flood insurance policy, observers said.

Some applaud the agency's recent delay of the mandatory compliance date for a new Qualified Mortgage standard. Others say it leads to more uncertainty for lenders, opens the door to additional changes and enables some companies to loosen their underwriting.

The consumer bureau's revamp of criteria for "qualified mortgages," a special regulatory class of loans free from liability, emphasizes pricing instead of a borrower's debt-to-income ratio.

Demand trends were mixed in the third quarter, with consumers showing more willingness than businesses to take on new debt, according to the Fed’s most recent survey on bank lending practices.

The agency confirmed that loans backed by Fannie Mae and Freddie Mac can continue avoiding debt-to-income limits as the bureau completes a revamp of the Qualified Mortgage standard.

The agency had raised concerns in the Obama administration about kickbacks in the marketing pacts between mortgage lenders and other providers, but the agency's recent guidance says the deals are legally viable.

The Consumer Financial Protection Bureau's overhaul of its Qualified Mortgage standard is alarming free-market advocates who say it will precipitate a return to easy credit and higher defaults and could disproportionately harm minorities.