Consumer Financial Protection Bureau (CFPB) Director Richard Cordray said on Thursday that mortgage lenders will be ready to follow a new underwriting rule set to go into effect this January. In overhauling mortgage rules in the wake of the 2008 financial meltdown, CFPB finalized a regulation earlier this year that levies new mortgage underwriting requirements on lenders, including a requirement that they take certain steps to verify a borrower's ability to repay the home loan. In return, they can receive a modicum of protection against lawsuits associated with loan origination.
The rule will apply equally to such major banks as JPMorgan Chase & Co. and Wells Fargo & Co. that originate mortgages, and such non-bank lenders as Ocwen Financial Corp. and Nationstar Mortgage Holdings Inc. Some smaller banks are concerned that the rule will drive them out of the mortgage lending business. But Cordray insists that there are exemptions in place that will apply to them.