In January of 2013, the mortgage industry witnessed the birth of a new income-underwriting era. The Consumer Finance Protection Bureau (CFPB) published new requirements for mortgage lenders to carefully assess a consumer’s ability to repay their mortgage loan. The new standards were dubbed the “ability-to-repay” rules and were set to take effect one year later in January 2014.
We’ve posted the June First American Loan Application Defect Index, which estimates the frequency of defects, fraudulence and misrepresentation in the information submitted in mortgage loan applications. The Defect Index increased 1.2 percent in June 2017 as compared with the previous month, and increased 16.7 percent as compared to June 2016. The Defect Index is down 17.6 percent from the high point of risk in October 2013.