The debt to income ratio of 35% is related to the loan being refinanced, not the new loan. Borrowers who have a smaller ratio typically don’t need to refinance, and the bill is designed to aid borrowers that are already distressed, ergo, the requirement for more than 35% on the old loan.
One of the other key terms of the bill requires that the borrower could not have lied on the original loan application. Income and assets cannot have been overstated. This will exempt a significant percentage of sub-prime loans that might otherwise qualify. It renders the bill almost meaningless. Significant for those few that might qualify, but nowhere near the 500,000 estimated by the CBO.
