Posted: 13 Jan 2014 12:04 PM PST
Posted: 13 Jan 2014 11:57 AM PST
The new mortgage rules that went into effect on January 10th could hurt lower income buyers going forward.
Under the Dodd-Frank Act that was passed in 2010, lenders are now going to have to have to make a "reasonable, good faith determination" that a borrower can repay the loan before the loan is written. This sounds like common sense, but it does place a new responsibility on lenders, and that will always make it harder for those on the lower income end of the earning curve to borrow.
The real hassle will be the new levels of documentation that will be requested by the banks and mortgage companies. The risk of potential penalties from the Consumer Financial Protection Bureau, a new bureaucracy that will monitor lending practices, means that lenders will focus only on qualified mortgages going forward.
The Qualified Mortgage must meet these requirements:
With the added risk and expense of writing new mortgages, many lenders are going to avoid the riskier new buyer market, something we do not need right now for the resale housing industry.
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