The mortgage industry is concerned about potential delays to the implementation the debt-to-income ratio (DTI) Loan Level Price Adjustments (LLPA). The mortgage industry believes the DTI LLPA should not be delayed, but instead eliminated completely. This is because the fee would disproportionally increase the cost of homeownership for consumers with good credit, and thereby restrict accessible to credit.
The DTI LLPA is part of the Qualified Mortgage (QM) rule, which was issued by the Consumer Financial Protection Bureau (CFPB) in 2013. The rule was designed to make sure lenders made responsible mortgage loans. The DTI LLPA was proposed as an add-on to the QM rule and is the only component which assesses a fee based on the DTI ratio. This means that higher DTI ratios will trigger a fee, which will disproportionately increase the cost of homeownership for consumers with good credit and reduce access to credit.
In response to the concerns of the mortgage industry, the CFPB issued a statement, indicating that they are aware of the problems posed by the DTI LLPA. They are currently reviewing the issue and said, “We know there are concerns that the DTI LLPA could cause lenders to take unnecessarily conservative credit standards,” but “it is too early to draw conclusions about the potential impact.” The CFPB is concerned about the potential impact and is seeking feedback from industry stakeholders on the issue.
The mortgage industry has reacted cautiously to the CFPB’s statement, and some have issued a call for the elimination of the DTI LLPA. Industry leaders have argued that the fee creates an unnecessary burden, and further goes against the original purpose of the QM rule, which was to make sure lenders made responsible mortgage loans. Most in the industry are hopeful that the CFPB will respond positively to their concerns and make the necessary amendments to ensure homeownership remains accessible and affordable.
You can read this full article at: https://www.housingwire.com/articles/the-mortgage-industry-doesnt-want-the-dti-llpa-fee-delayed-they-want-it-killed/(subscription required)
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