Financing The American Dream
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New 2015 Residential Mortgage Loan Limits
Click here to read: "New 2015 FHA Loan Limits"
Click here to read: "New 2015 Conventional Loam Limits"
Click here to read: "New 2015 VA Loan Limits"
Click here to read: "New 2015 USDA Loan Limits"
Click here to read: "High Cost Mortgages"
Click here to read "Closing Disclosure - Consumer Financial Protection Bureau"
Click here to read "TILA-RESPA Integrated Disclosure Guide - Consumer"
Click here to read: Mortgages-What You Need to Know.pdf
Click here to read: Make The Most of Your Credit Score.pdf
Click here to read: Financial Planning Home of Your Own.pdf
The Changing Mortgage Lending Landscape
The mortgage industry’s response to the announcement of the new rules has been mixed. No doubt about it.
A number of market, regulatory and legislative developments are working together to reinforce the importance of consumer protection and internal controls in the area of banking and mortgage products. Whether it is mortgage loans, consumer loans, credit cards or other credit products, Congress, state legislatures, federal and state banking authorities and state attorney generals are looking at the products - their terms, disclosures and uses - for compliance with existing consumer protection and other laws.
The Consumer Finance Protection Bureau issued new oversight rules to ensure prospective homebuyers have the ability to repay their mortgages and to make the whole process more transparent. They go into effect in January, 10, 2014. Fannie Mae has updated their systems to comply. See attached notice.
The “Ability-to-Pay”, is totally about the future of loan performance, the saleability of loans to investors and lender protection. Whether a lender adheres to a 43% DTI or they approve a loan with 55% DTI, at the end of the day, compliance, quality control and risk management is every lender’s concern. Lenders do not want to be sued or have to buy a loan back because of default.
Just to recap, these rules set new, national standards to help make sure borrowers are treated fairly and have a better chance of getting a loan.
The New Federal Rules
Staring next January, mortgage lenders must:
Ultimately, the final verdict on this rule will be made by the market. I believe the rule will effectively block the return of risky product features and inadequate documentation. If it also provides lenders the certainty needed to originate qualified mortgages broadly across the market to creditworthy borrowers, it will have been a success. However, if the result is a tightening of credit as lenders pull back from offering loans that would create greater risk of litigation, the CFPB may need to quickly revisit the rule to avoid harming the housing recovery.
The response from state policymakers has been mixed as well, with a sense of relief that at least the rules are out. Many states and lenders have hit the ‘pause’ button in our own consumer protection efforts in this arena, at least to some extent, while waiting to see if their investors will actually buy loans outside the Ability-to-Pay rules.
It is too early to gauge the effect of this rule. It is my opinion, that lenders will stay “under the radar” from potential liability and they are preparing for multiple in-house and external audits in doing so. Today, loan approval is not a “one-shoe-fits-all” approach. The file will have to be well documented and convincing that the borrower has the ability to pay the entire mortgage.
Don’t shoot the messenger.
NAR 2013 Realtors Conference and Expo - Click here to read
Quality Mortgage (QM) and Ability-to-Repay Rules
FHA has issued new manual underwriting requirements. On December 11, 2013, HUD published in the Federal Register its final notice. Click here to read the new requirements
New FHA "Back to Work" Program - Click to read article: Purchasing after a Short Sale, Foreclosure, Bankruptcy
Click here for "Homeowner's Budget Form"
USDA Loan Update - The USDA Rural Development income eligibility limits for the Single Family Guaranteed Loan Program have officially changed effective February 12, 2014.
Click here: The Guaranteed Underwriting System and the Income Eligibility Calculator
Income limits can also be viewed by click here: http://www.rurdev.usda.gov/HSF-Guar_income_Limits.html
Free Home Value Estimators
Click here: Mortgage News Update