New Mortgage Rules Take Effect Friday

The rules that go into effect include the “ability to repay” rule, in which borrowers must have the financial means to be able to repay the loan amount. 

The Qualified Mortgage standard will also take effect. Qualified mortgages cannot be made to a borrower with a debt-to-income ratio of greater than 43 percent, Cordray explained. Qualified mortgages also cannot have certain risky features, “such as paying interest only or even negatively amortizing so that each month the consumer owes more than they did before and loans must have relatively reasonable points and fees,”  Cordr

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Lenders Urged to Improve Foreclosure Efforts

The Obama administration urged banks to improve their service of the government’s anti-foreclosure efforts through the Making Home Affordable Program and to use federal funds more effectively in helping to save struggling home owners from foreclosure.
The U.S. Treasury singled out CitiMortgage Inc., telling the bank it needed to make “substantial improvement” in its loan modification efforts through the Home Affordable Modification Program and to reach out to more home owners who are eligible to receive assistance.
The Treasury provides financial incentives to mortgage servicers under HAMP, which aims to encourage servicers to change the terms of struggling borrowers’ mortgages and lower their m

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