New mortgage lending rules to limit loan options [Obama’s Plan: LESS FREEDOM FOR CONSUMER]
Chicago Tribune ^ | 1/10/13 | Mary Ellen Podmolik
Posted on Thursday, January 10, 2013 8:49:59 AM by SoFloFreeper
The Consumer Financial Protection Bureau is planning a Thursday morning announcement of new lending rules that it hopes will move the mortgage market toward a sustainable middle ground, somewhere in between the free-wheeling days of no-documentation loans and the current, restrictive environment.
For most borrowers, the rules will mean no more interest-only mortgages, no more loans where the principal due increases over time, no more loans that carry a balloon payment and no more loan terms of more than 30 years. In addition, would-be borrowers will be less likely to qualify for a mortgage unless their total debts account for no more than 43 percent of their monthly gross income.
These so-called qualified mortgages are expected to be embraced by lenders, because by following the criteria, they will have a better chance of shielding themselves from lawsuits from consumers whose loans go bad.
(Excerpt) Read more at my.chicagotribune.com …