Detroit Free Press from Detroit, Michigan • Page B10

10B WWW.FREEP.COM SUNDAY, JAN.13,2013 BUSINESS ill consumers who take out a mortgage have a better shot at actually being able to repay that mortgage under some new rules? Long before the financial meltdown, the question would have seemed silly. Who, really, would give you a mortgage if you had no chance ever of making the payments on it? Unfortunately, we learned the answer to that the hard way. Plenty of lenders made mortgages to people who could not pay the money back. Worse yet, thousands of troubled homeowners discovered they could not sell the house to cover what they owed once bad times hit. had a housing market that was reckless about lending said Richard Cordray, director of the Consumer Financial Protection Bureau, in astatement.

The assumption was that home values would always go up. Lenders could off-load virtually any mortgage onto the secondary market no mat- ter what. Granted, since the housing bubble burst, been far tougher to get a mortgage as lending standards shifted to a tighter extreme. Now, finally, experts say in the early stages of a housing recovery. But consumers might be wondering whatit will take to make it easier to get a mortgage.

So there are concerns if new restrictions could contribute to making mortgages hard to get and if low-income families would face greater difficulty. The consumer watchdog agency is inviting comment on proposed amendments that would offer some exemptions to the new rules, such as exempting nonprofit creditors that work to help low-tomod- erate-income consumers obtain affordable housing. The new rule take effect until a year from now. designed to help ensure that consumers get responsible according to the consumer watchdog agency. The consumer bureau was created under the 2010 Dodd- Frank Act, which addressed the troubles created in the financial meltdown.

Michael Calhoun, president of the Center for Responsible Lending, said in a statement that the new rules strike a balanced the most part. rules preserve legal protection for borrowers with the riskiest he said. In the past, Calhoun said, some families were too often steered into abusive financial products. The American Bankers Association noted that the rule will still provide most consumers access to safe creditbut also warned that the rules would transform lending practices and could restrict access to credit for some consumers. Aqualified mortgage under the ability-to-repay system is one that meets certain standards to indicate the borrower should be able to repay that loan; lenders would have more protection in the case of legal disputes if they followed the standards.

Lenders could make loans that qualified, but some experts say not likely. Under the new system, loans that meet separate federal standards also would be permitted for the first seven years. no rule here setting a minimum down payment for the house or a minimum credit score. Under the ability-to-repay rules, creditors would have to consider a income and employment among other factors. The general rule requires monthly payments be calculated based on the highest payment that will apply in the first five years of the loan.

Teaser rates would not be able to mask the true cost of a mortgage, according to regulators. The lender would need to consider the ability to repay both the principal and the interest over the long term. total debt payments could not exceed of their pre-tax income. The idea is that a borrower would not be granted a qualified mortgage if 43 cents of every dollar of income must be dedicated to debt payments, including a mortgage. Many loans made recently already meet that standard, according to regulators.

Such rules, of course, are part of the backlash of a housing market gone wild. Cordray pointed out some housing stories in his statement. Cordray said that a California man wrote the consumer bureau, saying his house was in the process of being foreclosed on and he was desperate. During the housing bubble, the California man made $50,000 a year but was sold a mortgage for more than a half amillion dollars. The bureau heard from a Michigan couple with credit scores in the 800s who wanted to refinance their home at current low rates.

The home is now worth much more than the original mortgage loan. Yet, Cordray noted, the Michigan couple said they could not get approved because there were no comparable sales in their neighborhood during the last 12 months. Will the ability-to-repay rule help get the mortgage market back on track? Maybe bring more clarity to the process? We can certainly cross our fingers as lenders double-check the numbers. CONTACT SUSAN TOMPOR: 313-222-8876 OR Ability-to-repay rule may restore loansanity SUSAN TOMPOR SAYS IT HAS BEEN TOUGH TO GET AMORTGAGE A ctress Erin love affair with the Motor City began in 2010 when she moved here to film the TV drama The ABC show lasted 18 episodes until being canceled, but her feelings for Detroit are still strong. It led her to launch Mittens for Detroit a charity that has given away nearly 35,000 pairs of mittens and gloves to local charities.

That group along with The Heat and Warmth Fund (THAW) another organization helping people stay warm will get a boost during the final three days of the upcoming North American International Auto Show. when the public is being asked to bring new mittens and gloves as well as make donations during the Hands initiative. It is being held with support of the Detroit Auto Dealers puts on the auto show. Hands runs from Jan. 25-27.

Show-goers can look for contribution boxes at show entrances inside Cobo Center. The NAIAS attracts hundreds of thousands of people each year and raises money for charities through its black-tie Charity Preview. Hands continues that same community spirit. charity Mittens for Detroit has been warming hands and hearts since its founding in November 2010 by Cummings. It is aligned with the North Woodward Community Foundation.

Cummings was inspired to create MFD while passing out candy on Halloween with her cousin, Kathi Moss, who lives in Southfield. Two little girls and their mother came to door trick-or-treating, and one of the girls was missing a glove and shivering. Moss invited the family inside and gave the girl a spare pair of gloves. Seeing the impact it had led Cummings to start the group. She also met Jason Brown, public relations consultant who represents Just Baked Cupcakes.

They met when he dropped off Just Baked Cupcakes for the crew. Brown is among those donating time and helping to promote Mittens for Detroit. The organization has gained global attention thanks to celebrity with donations coming from as far as Australia. The group has 75 drop boxes for gloves across metro Detroit and just added a jewelry collection with the logo being sold online at www.mittensfordetroit.org. The group uses donations to buy gloves at a discounted rate from Broner Hat and Glove in Auburn can buy six pairs of gloves for she said.

Bob Broner, third-generation company owner, donates gloves, too. The Texas-born actress, who lives in New York City, has appeared in numerous TV shows including and ABC canceled last year. She has movies coming out including an action thriller with Michael Shannon, Winona Ryder and Ray Liotta. play Cummings is focusing her community efforts on Mittens for Detroit. She plans toattend the auto Charity Preview and sign autographs at the show Jan.

25-26. also attend her third annual and Comedy Show on Feb. 9 at MGM GrandDetroit. city opened its arms to I feel like I am coming home she said. will never stop loving Detroit as long it continues to love CONTACT CAROL CAIN AT 313-222-6732 OR SHE IS SENIOR PRODUCER AND HOST OF WHICH AIRS AT 11:30 A.M.

SUNDAYS ON CBS 62. Hands runs from Jan. 25-27at the North American International Auto Show at Cobo Center. Actress Erin Cummings is to attend the auto Charity Preview on Friday and sign autographs at the showJan. 25-26.

More information and donations can be made at www Actress shows Motor City love with gifts of gloves CAROL CAIN TALKS WITH ERIN CUMMINGS ABOUT CHARITY INITIATIVE Erin Cummings.