A key piece of the Consumer Financial Protection Bureau's new qualified mortgage (QM) standard is being widely misinterpreted, said director Richard Cordray. Addressing the Consumer Federation of America, he noted that claims circulating about the impact of the ability-to-repay rule are "wrong in three ways."
Contrary to rumors, Cordray clarified, the criteria do not apply to existing mortgages -- only to new loans with an application date on or after Jan. 10, 2014. Moreover, the rule does not prevent lenders from financing borrowers whose debt-to-income (DTI) ratio exceeds 43 percent. "Another myth is that this rule restricts down payments," the CFPB director added. "In fact, it says nothing about how much of a down payment you have to make on the house, but leaves that entirely up to you and your lender."