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Friend or Foe? Mortgage Rules Show 2 Faces

16.01.2014
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The home loan industry now has to adapt to new mortgage rules that offer borrowers much needed protection against lender abuses and reckless lending standards. But the changes may not please all borrowers.

Some of the new mortgage rules will influence qualification requirements and the types of mortgages that borrowers get. The regulations, drawn up in 2013 by the Consumer Financial Protection Bureau, are now in effect.

The gist of one of the main rules is simple: Lenders will be required to ensure that borrowers have the ability to repay their mortgages. In return, lenders will be protected from borrower lawsuits so long as they issue “safe” mortgages that follow guidelines.

These safe mortgages are what the CFPB calls “qualified mortgages.” As defined by the CFPB, only 12.8% of new mortgages in 2012 didn’t meet the “qualified mortgage” standard, according to real estate data provider CoreLogic.

The new […]

Far fewer mortgage borrowers ‘deeply underwater’

15.01.2014
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A growing number of mortgage borrowers are keeping their heads above water, according to a report from RealtyTrac.

The company reported Thursday that 9.3 million properties, or 19% of all homes with mortgages, were “deeply underwater” in December, meaning borrowers owed at least 25% more on their mortgage than the home was worth. That’s down significantly from 26% of all homes with mortgages, or 10.9 million properties, last January, RealtyTrac reported.

A recovery in home prices has certainly helped to turn around the fortunes of many homeowners. The average U.S. home price jumped nearly 14% year-over-year through October (the latest data available), according to the S&P/Case-Shiller home price index. That has added thousands of dollars to the average home’s value.

An increase in home equity typically means fewer foreclosures, said Daren Blomquist, a spokesman for RealtyTrac. “Negative […]

The switch to self-employment has mortgage implications

15.01.2014
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I am an unintended consequence.

I have loads of money. I own four properties free and clear. I have no debt. My credit file is impeccable. I have a credit score of 760.

And I was just turned down for a mortgage.

Not just any mortgage, but a cash-out refinance of less than six figures on a foreclosure I bought for cash, rehabbed and turned back on the market as a rental. Furthermore, I was only asking for a loan-to-value ratio of 70%, meaning I was leaving 30% of the home’s value as equity. And I was rejected.

All of my rental properties are fully leased, each supported by current rental agreements. The lender had copies of my tax returns for 2011 and 2012, each year validated by copies from the IRS. The lender also had copies of each and every one of my bank statements […]

A jumbo mortgage without a jumbo down payment

13.01.2014
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Traditionally, this insurance is sold to buyers who make small down payments, typically less than 20%, and is designed to protect lenders if a borrower defaults. The policies were widely used during the housing boom, but insurers scaled back amid rising foreclosures. Demand for the product plummeted when banks ended low down-payment programs for most borrowers.
But now, as home values are rising and banks are experimenting with looser lending standards, private insurers are preparing a comeback. They are especially interested in private jumbo loans, which exceed $417,000 in most of the country and $625,500 in pricier markets. To appeal to wealthy borrowers, insurers are lowering costs and increasing the size of mortgages they will cover.
In December, Mortgage Guaranty Insurance Corp., a private-mortgage insurer, increased the maximum mortgage it will insure from $750,000 to $850,000. Genworth Mortgage Insurance also raised its cap to […]

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