Moreover, the proposal avoids prescribing quantitative underwriting requirements. For example, the proposal would prohibit a pattern or practice of disregarding the ratio of applicants' income to their debt, but it does not prescribe a maximum ratio because the appropriate number depends heavily on other risk factors, which vary from loan to loan. At the same time, the proposal does offer specifics.
For example, it would create a presumption that a lender had violated the regulations if it engaged in a pattern or practice of failing to underwrite at the fully-indexed rate. 6 Our proposed regulations would be more robust and comprehensive than the subprime guidance the agencies issued last year. The regulations would apply to all mortgage lenders, including independent mortgage companies.