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Mortgage Changes
March 5th, 2014 9:47 AM

This new year brought many regulatory changes, especially for the mortgage industry.  Here are some regulations that started in January, 2014, according to The Association of Mortgage Professionals and may affect current homebuyers:

Ability-to-Repay Mandate:  The Consumer Financial Protection Bureau designed this regulation to set a gold standard for lending to ensure each borrower is truly qualified.  Lenders will follow a set of guidelines to establish consumers income, assets and obligations before approving them as eligible.

Decrease in FHA Loan Limit:   The Federal Housing Administration (FHA) announced that as of Jan. 1, 2014, home mortgages would be limited to $625,000, down from $729,750.  Homebuyers looking to obtain a larger loan now have to apply for a jumbo loan, which will most likely come with a higher down payment.

Caps of Loan Origination Fees:  On January 10, 2014, a new rule was established that points and fees on mortgages cannot exceed 3% of the total loan amount. 

Tighter Regulations for Self-Employed:   Those people without an IRS Form W-2 will face more difficulty when they apply for loans.  It is difficult for individuals to prove their debt-to-income ratio without the proper documentation, even if they have a high net worth and prefect credit.  The income calculation takes into consideration the customer write-offs that reduce taxable income. 

Many new regulations have been put into place to protect  consumers from borrowing more than they can afford.  The errors and tragic mistakes made during the housing market boom will hopefully be avoided and keep real estate moving in a positive direction.

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Posted by Barbara Doeringer on March 5th, 2014 9:47 AMPost a Comment

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