New rules take effect on Jan. 10 to protect U.S. borrowers from the kind of abusive lending that helped cripple the housing market six years ago. Despite industry concern that the changes will shut lower-income and other Americans out of the opportunity to buy a home, experts say the Consumer Financial Protection Bureau's mandates will cultivate sustainable homeownership by lending only to consumers who have the ability to repay their mortgage.
"The rules may cut some credit [availability] at the margins," concedes CoreLogic deputy chief economist Sam Khater, "but as a whole they will ensure that borrowers have a product they can afford." While the new standards are grounded in what CFPB director Richard Cordray calls a "back to basics approach" that avoids surprises, debt traps, and "runarounds" in underwriting, they also will serve borrowers who have problems keeping up with their mortgage payments. "It may seem silly that we need rules to tell servicers to answer the phone; not to lose people's paperwork; to tell borrowers how much they owe," said Cordray. "But ... we have seen with our own eyes the grave dysfunctions in the mortgage market."