Spring 2014

Will the latest round of reform bring an end to subsidizing risky mortgages?

Is America’s housing finance crisis finally behind us? After two years of collapse and three years of stagnation, home prices finally rallied in 2013.

In order to prevent banks from issuing a new round of mortgages that borrowers cannot actually afford, the Consumer Financial Protection Bureau recently issued rules governing “Qualifying Mortgages” (QM). QM loans are protected from legal challenges by borrowers against the mortgage originator should the borrower be unable to make payments. Banks therefore have an incentive to generate loans that get the QM seal of approval…

» See full article in Regulation, Spring 2014.

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