Realtors, mortgage lenders and builders cheered when Mel Watt, the incoming overseer of Fannie Mae and Freddie Mac, played Santa just before Christmas and delayed a package of loan fee increases that would have made buying a home more expensive in 2014, even for people with great credit.
Watt, a North Carolina Democratic congressman since 1993 and a former chairman of the Congressional Black Caucus, is scheduled to be sworn in as director of the Federal Housing Finance Agency Jan. 6. He’ll replace Acting Director Ed DeMarco, who sought to raise loan fees as part of his effort to shrink Fannie and Freddie’s role in the marketplace.
Watt said he needed time as new director to evaluate the impact of the fee increases, which DeMarco had envisioned taking effect this spring, before lenders began pricing them into their 2014 rate quotes to mortgage applicants.
But is there any […]
Mortgage lenders will soon have to work under stricter regulations after passage of the federal government’s Ability to Repay rule, designed to reign in loose lending standards that officials blame for contributing to the Great Recession.
Ability to Repay is set to go into effect on Jan. 10. The regulation, promoted by the Consumer Finance Protection Bureau, is written to deter what the government calls “risky features,” such as loans allowing for interest-only payments or negative amortization, a term that refers to a payment schedule in which a borrower’s outstanding debt can increase even while payments are made.
The new standards also do not generally allow for points or fees charged to a borrower to add up to more than 3 percent of the loan amount.
Home loans that meet the new standards will be dubbed “qualified mortgages.” The rule does not always forbid lenders from issuing […]
Mortgage reform is kicking in on Jan. 10, bringing significant changes to home loan financing.
The new rules were written by the Consumer Financial Protection Bureau to protect homebuyers from risky mortgages like the ones that led so many homeowners into foreclosure in recent years. The rules also protect investors from buying shoddy mortgage-backed investments.
The downside for consumers is that the rules make it harder for some people to qualify for a home loan. So, if you’re shopping for a mortgage or refinancing right now, it’s a good idea to close your loan before the end of the year.
In fact, though, many banks and mortgage lenders already are playing by the new rules.
The Ability to Repay Rule requires lenders to evaluate your financial fitness to repay a loan, even if it’s an adjustable-rate mortgage with low […]
The government shutdown may force the housing market to a near-standstill, simply because of a clog in the paperwork.
Although initially it seemed the housing market would be largely unaffected by the government shutdown, lenders are hitting a roadblock that could cause major headaches in the mortgage market. The IRS is closed, and that means lenders cannot verify any tax information from applicants.
Whenever a borrower applies for a mortgage, he or she provides the lender with a slew of paperwork–bank statements, paycheck stubs, W2s and federal tax returns–that the lender must then verify. In order to do so, the lender requests a verification of employment and a 4506-T tax verification transcript from the IRS that details the borrower’s tax return information, verifying what the borrower gave to the lender.
“Without access to tax transcripts and relevant information that must be verified by these agencies […]