Excerpt
MARGARET WARNER (Newshour): At the root of the 2008 credit and housing bust were risky, even reckless mortgages made to customers who couldn't afford them.
Today, the new Consumer Financial Protection Bureau issued regulations spelling out how lenders must ensure that borrowers can repay their loans. Banks that follow the criteria would be protected from most lawsuits. To meet the standard of a qualified mortgage, a bank would have to verify the borrower's income, employment and total debt, which could not be more than 43 percent of his or her income.
The criteria also would prohibit subprime loans, teaser low-rate mortgages with balloon payments later, interest-only mortgages, and fees of more than 3 percent.
Richard Cordray is the director of the agency, and he joins me now.
COMMENT: About time! Back to the old tried-and-true standards for loans.
Bottom line, if you cannot afford to pay it off, do not borrow.
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