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Wells Fargo effort to strealine mortgages

Wells Fargo & Co has assigned about 400 underwriters to originate mortgages for the bank to hold, with as many as 40% of those loans likely to fall outside government guidelines taking effect this week. The bank is training the group as a way to increase lending without losing control of quality. The group will review loans including those with terms that prevent them from qualifying for protections provided by the Consumer Financial Protection Bureau, or CFPB, under new rules. The bank, responsible for about one in five U.S. mortgages last year, is pushing the initiative to compete for clients seeking non-conventional loans such as those with interest-only payments. That segment will be increasingly sought-after at a time when rising interest rates are curbing borrowing demand and banks are facing the biggest regulatory overhaul since the Great Depression. The US Congress directed the CFPB, formed as part of the 2010 Dodd-Frank Act, to create the qualified mortgage rule after banks were blamed for helping spark the 2008 credit crisis by giving mortgages to people who couldn’t afford them. The regulations provide a measure of legal protection to banks that meet guidelines and expose them to legal liabilities if the loans charge high fees or require total debt payments exceeding 43% of the borrower’s income.

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