Have QM and ATR Really Helped?

In the wake of the Subprime Mortgage Crisis that led us to the Great Recession of 2009 it is not surprising that government responded by tightening up the lending standards and creating new disclosure rules for lenders when dealing with borrowers. No one can deny that too many unqualified borrowers were granted loans that led to great dislocations for both those individuals as well as for the economy as a whole.

What can be disputed, however, is whether the reforms enacted were appropriate and will lead to the desired outcome, which should be to reduce the origination of loans that will ultimately cause systemic losses without inadvertently creating guidelines that will depress lending in situations that will not lead to lender loss.

via Ethan Penner’s Blog: Mortgage Credit.

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