Tag Archives: qualified mortgages
New mortgage guidelines for borrowers continue to evolve

Since 2008, mortgage and financial institutions have seen many changes in the way it does business

Lenders as well as consumers must now consider structured guidelines and steps before receiving a mortgage that might cause consumers harm in the future

 To the best of the lenders ability, the goal is to make sure  consumers can qualify and have the ability to repay their mortgage

 

Changes in mortgage underwriting for mortgage clients continue to evolve

Home buyers are discovering that the world of lending has changed

Lenders are asking for concrete documentation for income, assets, explanations regarding credit, and other obligations such as student loans and prior collection accounts

 

These new underwriting guidelines and regulations regarding lending are taking place to make insure consumers are protected

In other words, it doesn’t do a homebuyer much good to get into a mortgage debt repayment, unless they have the ability to repay that debt

Yes, the old days of common sense underwriting and common sense lending have returned

 

consumerfinance

gov/” title=”(CPFB) ” target=”_self”>(CPFB) is now the primary governmental regulatory agency overseeing protecting consumers in financial transactions

 The Bureau promulgates rules and guidelines for lenders to insure consumers are protected

New rules by the Bureau were just announced requiring lenders to insure that indeed consumers have the ability to repay their mortgages

Many lenders have already started implementing these new mortgage standards, which are at this time, set to take affect January 10, 2014

The final rule implements sections 1411 and 1412 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), which generally require creditors to make a reasonable, good faith determination of a consumer’s ability to repay any consumer credit transaction secured by a dwelling (excluding an open-end credit plan, timeshare plan, reverse mortgage, or temporary loan) and establishes certain protections from liability under this requirement for “qualified mortgages



The final rule also implements section 1414 of the Dodd-Frank Act, which limits prepayment penalties

Finally, the final rule requires creditors to retain evidence of compliance with the rule for three years after a covered loan is consummated

At a minimum, creditors generally must consider 8 of the following underwriting factors:
(1) current or reasonably expected income or assets;
(2) current employment status;
(3) the monthly payment on the covered transaction;
(4) the monthly payment on any simultaneous loan;
(5) the monthly payment for mortgage-related obligations;
(6) current debt obligations, alimony, and child support;
(7) the monthly debt-to-income ratio or residual income; and (8) credit history

Creditors must generally use reasonably reliable third party records to verify the information they use to evaluate the factors

The final rule also establishes general underwriting criteria for qualified mortgages

Most importantly, the general rule requires that monthly payments be calculated based on the highest payment that will apply in the first five years of the loan and that the consumer have a total (or “back-end”) debt-to-income ratio that is less than or equal to 43 percent

The Bureau believes that these criteria will protect consumers by ensuring that creditors use a set of underwriting requirements that generally safeguard affordability

(source: http://www

consumerfinance

gov/)

Tell us what do you think about the new rules and guidelines?

Do you think you are qualified?

Buying a home in Delaware – Consider Ability to Repay Mortgage!

was not on the forefront of the minds of consumers purchasing homes

There was a feeding frenzy to buy homes regardless of the ability to repay the loan

The prevalent thought at the time seemed to be , buy now and worry later

Unfortunately, this school of thought has hence caused thousands to lose their homes in foreclosures and scores other also filing for bankruptcy

 

Since 2008, the mortgage world of finance  has seen a complete change in the way it does business

Lenders as well as consumers must now consider many new guidelines before receiving  a mortgage

 One of the  biggest considerations is can the consumer qualify and still have the ability to repay their mortgage? 

Changes in mortgage underwriting to qualify for a mortgage has been a rude awakening for many consumers, as denials have increased

 Many home buyers have found that the world of lending has changed

Lenders are asking for concrete documentation for income, assets, explanations regarding credit, and other obligations such as student loans and prior collection accounts

These new underwriting guidelines and regulations regarding lending are taking place to make sure consumers are being protected

In other words, it doesn’t do you much good to get into a debt repayment, unless you have the ability to repay that debt, only later to endure the heartbreak of losing what you thought was a sure thing

 Making sure you have the abiliity to repay are a return to common sense and reasonable financial responsibility on both lenders and consumers

 

The

consumerfinance

gov/f/201301_cfpb_final-rule_ability-to-repay-preamble

pdf” title=” final rule” target=”_self”> final rule implements sections 1411 and 1412 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), which generally require creditors to make a reasonable, good faith determination of a consumer’s ability to repay any consumer credit transaction secured by a dwelling (excluding an open-end credit plan, timeshare plan, reverse mortgage, or temporary loan) and establishes certain protections from liability under this requirement for

consumerfinance

gov/” title=”Bureau” target=”_self”>Bureau believes that these criteria will protect consumers by ensuring that creditors use a set of underwriting requirements that generally safeguard affordability

(source: http://www

consumerfinance

gov/)

Please feel free to contact us with any questions or concerns or to see if you This entry was posted in blog and tagged , , , , , on by .