“I’m concerned we’re going to force a second correction in the housing market by creating a regulatory clampdown on fully sustainable homeownership because too many people haven’t really dissected the deep nuances of these rules,” he said in an interview yesterday.
Mortgage credit is already tight. Borrowers whose loans closed in 2012 had an average credit score of 748, which would place them in the top 37 percent of Americans, according to Ellie Mae, a Pleasanton, California, company that provides software for the mortgage industry. Those buyers made down payments averaging 21 percent. The interest rate on a 30-year fixed-rate mortgage averaged 3.9 percent in 2012, Ellie Mae said.
Still to come from the CFPB are new rules governing loan officer compensation and regulations governing simplified loan documents.
International regulators are phasing in new capital standards mandated under the Basel III accord by 2019. Those will require banks to hold more capital against certain mortgages.
The full impact on lending will only become clear once all the rules come out, and the most restrictive rules will determine the scope of the market, said Tim Rood, a partner in Washington-based consulting firm Collingwood LLC.
“Particularly in an environment as heightened as this one, you’re going to regress to the lowest common denominator from the credit perspective,” he said. “Whichever of these standards is the most conservative is the one that you’re going to adhere to.”