Skip to comments.CFPB Unveils Sweeping Changes to Mortgage Rules
Posted on 01/10/2013 9:47:50 AM PST by illiac
The Consumer Financial Protection Bureau unveiled new mortgage rules Thursday that are expected to change how home buyers go about getting approved for a home loan.
Every company that issues mortgages will be required to follow the new guidelines.
Loans that meet the agencys new lending criteria now will be called a qualified mortgage. Qualified mortgages will be given protection for the bank from lawsuits filed by troubled borrowers or buyers of mortgage-backed bonds.
A qualified mortgage will consist of the following: Lenders must prove that income and assets are sufficient to repay the loan (this applies to jumbo loans as well). Borrowers must be able to document their jobs. Credit scores will have to meet a minimum standard. Borrowers will have to be able to show that they can also still afford other debts associated with the home, such as home equity loans as well as property taxes. Lenders will consider borrowers other debts before issuing a mortgage too, such as student loans, car loans, and credit card debt. Monthly payments must be affordable to the borrower.
Home buyers who fail to qualify for a qualified mortgage can still get a mortgage, but mortgage payments must not be more than 43 percent of the borrowers pre-tax income.
(Excerpt) Read more at realtormag.realtor.org ...
I had a strange experience two weeks ago while trying to refinance our mortgage. Credit scores were very high and not a problem, but the appraisal came in very low. Sales in our neighborhood have been from repo houses and thus very low.
We wanted to ask the apraiser if he’d considered a few energy and ADA updates we had installed in our house. Our banker said that we couldn’t question the appraisal, that we would be fined as would she.
I’ve never heard of the consumer being fined for asking questions of an appraiser that the consumer paid to do an appraisal.
Does anyone know anything about this?
Constitution - hurt.
Federalism - hurt.
Increasing size of "federal" power via non-legislative fiat-driven agencies - Augments even further.
probably going to get a lot harder to get a loan
Call me crazy, but didn’t banks have all these guidelines in place before the creation of this useless new federal agency? Didn’t the Community Reinvestment Act remove these guidelines?
I’m not seeing anything unreasonable here but I think that 42% number is high.
43%!? Holy cow! That’s on helluva upside limit!
When I bought my first house in 1989, my upside limit was 33% and I was a terrific risk.
Stupid, stupid, stupid.
1. The appraiser should not have used foreclosed or distressed sale homes if non-foreclosed homes were available for use in the appraisal.
2. Since Dodd-Frank passed, appraisers can no longer talk to the borrower about the results of an appraisal. The appraisers client is the entity that contacted the appraiser to perform the appraisal. The appraiser can only talk with their client about the appraisal results. The client is not the person who paid for the appraisal, but the person/entity creating the “contract” for the appraisal.
3. If a borrower had a question regarding the appraisal, they should go through their lender (appraiser’s client) to address those concerns and questions.
4. If the appraisal was ordered through an Appraisal Management Company (AMC), questions are to be directed from the lender to the AMC (appraiser’s client).
Hope that helps a little...
Your banker is full of crap.
We had a similar issue a couple years back. Credit scores over 800 but the house was under the value I needed it to be at to qualify for refinance. We went to another bank this past year and got it no problem. Question the appraisal. If you feel it is wrong, fight it.
These rules are much needed. The liberals stripped away all these rules and literally anyone could get a mortgage without any proof of employment or anything. It was absolutely insane. Talk to a mortgage broker about just how bad things got and thank retards like Barney Frank and Chris Dodd.
Anyone crying about big government and big brother because of this has their head up their ass. It SHOULD be hard to get a mortgage. You SHOULD have to prove employment and the fact that you can pay the mortgage. Simple as that.
Rush just commented about this on his show today. He pointed out that the leftists claim these guidelines back before the CRA were called "redlining" and used by evil bankers to deny minorities mortgages just because their ability to repay was questionable. We've come full circle.
Help the no money down deal is what maade the mess and now one has to prove he can pay the mortgage.
Back to grid one prove your worth the loan,the free ride company is out of business.
I know none of us like this agency or big nanny state government. However, the details themselves sound like long overdue common sense.
BTW...I forget to add....
The consumer cannot be fined for trying to question the appraisal. The lender will likely not be fined for questioning the appraisal.
This is a smoke screen set up by someone who does not understand Frank-Dodd or USPAP (uniform Standards of Professional Appraisal Practice.) USPAP also clearly defines who the appraisers client is, and it is in line with the client in my first post.
Yes, and Yes. Banks were told that using a person’s income to determine his ability to re-pay the loan was considered racist.
Looks racist to me. Its all about having a job and be able to pay.
"Qualified mortgages will be given protection for the bank from lawsuits filed by troubled borrowers or buyers of mortgage-backed bonds."
Another crony capitalism back room deal. How are consumers protected by this? The new rules don't even use a reasonable Debt to Income (DTI) ratio to consider the loan "qualified". Also, how does this protect the secondary market, which banks rely on heavily to keep the gravy train tumbling along...?
Thanks to all who reponded to my question. FPers are the BEST~
I think we are in housing bubble part 2. I live in fly over country. Every morning for the last year the newspaper has been full of foreclosure notices and sheriff sales That doesn’t matter. Money is flowing into building some real pieces of crap with asking prices of $400K to $600K. I don’t get it...
The only problem I see is if someone doesn’t use credit cards and has no credit score. A person may have no debt, save money, and pay cash for everything but they won’t look good on paper because of the lack of a credit score. Then what?
Loan documents used to be fairly easy to fill out. Now they’re called loan packages because they’re so thick.
This will further injure the housing market, but that’s the purpose of regulations.
These regs are not needed. Get the Feds out of the banking business. We live in an age where you can get near instant transparency on any bank. Let the Feds set the simple capital ratios for lending and the market will do the rest.
The new rules will take effect Jan. 21. Lenders have a year to fully implement these rules.
The Cloward-Piven Strategy, Saul Alinsky, and Their Influence on Obama
It was used to Destroy the Integrity of the National Banking System and confidence of it's citizens.
It was used to "overload" the Socialist Welfare system. It was never never meant to Help the populace...
it was formulated to destroy (the present) civil order and replace it w/ a Fabian Socialist Society...
Which can't / won't work; we tried that in the early 1600s in New England, it failed....very badly.