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New Mortgage Rules Already Impacting Wisconsin Banks


Aug 2 - With five months until new mortgage regulations take effect, Wisconsin's mortgage industry is already shifting, a survey by the Wisconsin Bankers Association shows. According to the WBA Bank CEO Economic Conditions Survey, 74 percent of responding bank CEOs have considered changing or discontinuing the banks' current mortgage loan products as a result of the new rules.

“These new regulations create a narrow definition of what constitutes a 'qualified mortgage,'” said Rose Oswald Poels, WBA president/CEO. “The financial industry now has to decide whether they will open the bank to greater regulatory and litigation risk by offering loans outside that definition.”

Forty-seven percent of bank CEOs say less than half of their current products fit within the definition of a Qualified Mortgage, the survey states. The remaining loans do not fall within the legal and regulatory safe harbor afforded QM loans, which presents increased risk for the bank. Currently, 91 percent of banks offer balloon mortgages; a product meant to serve Wisconsin consumers who have non-standard financing needs, which is only considered a QM for most banks for the next two years.
“Wisconsin banks will continue to serve the financial needs of their communities, as they always have,” said Oswald Poels. “Because of these rules, however, consumers will likely find it more difficult and expensive to get the financing they need to become homeowners.”