New mortgage rules set to be unveiled today by the Consumer Financial Protection Bureau will spell out how lenders must ensure that borrowers can repay their home loans, the Wall Street Journal reported today. The rules, which go into effect next January, were designed to enhance consumer safety without tightening credit standards beyond current levels. The 2010 Dodd-Frank financial-regulation overhaul changed lending rules to make banks legally responsible for determining that a borrower is able to repay a mortgage. The CFPB's rules are intended to implement that change. The upshot is that banks are likely to narrow their loan offerings and rely more on the 30-year, fixed-rate mortgage, a product unique to the U.S. and one that has required a government guarantee. Many lenders had expressed concerns that the ability-to-repay mandate would create open-ended legal liability that would lead to more-stringent lending standards. But regulators, sharing those concerns, said that they opted for rules that would not significantly restrict credit.
