A proposed change to the Dodd-Frank Act will make it easier for small banks to originate mortgages that meet the Qualified Mortgage standard. In theory, that could lead to the return of mortgages which combine a high debt-to-income ratio and a low credit score. But a requirement to keep those mortgages on their balance sheet argues against a significant loosening in lending standards. Reduced compliance costs may encourage small banks to increase lending volumes, but the overall impact on the mortgage market will be small.
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