New Mortgage Rule: Don't Lend Money To People Who Can't Pay It Back

Dems from the House and Senate are hashing out a final finance-reform bill. Yesterday, they added a section that would impose new rules on mortgage lenders, the WSJ reports.

Among other things, it would enshrine into law what seems like the most basic tenet of banking: Lenders can only give mortgages to people who have a "reasonable ability to repay" based on their income, credit history and indebtedness.

The section a response to the securitization-driven mortgage mania of the housing boom, when an unemployed hamster could get a seven-figure, negative-amortization loan.

The banking industry has argued that it goes too far, and could make it harder for qualified borrowers to get loans, the WSJ says.



Please keep your community civil. All comments must follow the Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.

NPR thanks our sponsors

Become an NPR sponsor

Support comes from