This new set of rules will be a win for the real estate industry, with the projected agreement much more moderate than the mortgage security standards proposed back in 2011. The federal reserve is scheduled to hold an open meeting on Wednesday, October 22, with five other regulators signing off before the end of the month.“NAR has strongly advocated for a Qualified Residential Mortgage rule that encourages sound and financially prudent mortgage financing by lenders while also ensuring responsible homebuyers have access to safe and affordable credit,” said NAR President Steve Brown, co-owner of Irongate Inc. REALTORS® in Dayton, Ohio. “We hope that the final rule will align with the broadly defined Qualified Mortgage / Ability-to-Repay rules that were implemented in January. Synchronization will provide lenders with much needed clarity and consistency as they apply the new standards to loan applications.”
These new set of rules will hopefully avoid a repeat of the real estate melt-down in 2008 by slashing the pre-existing requirement—extending from the 2010 Dodd-Frank law—that borrowers make a 20 percent down payment to get a qualified residential mortgage. New, lighter rules will instead require that loans comply with a separate set of mortgage standards written by the U.S. Consumer Financial Protection Bureau. These standards will evaluate allowed debt a borrower can take on in relation to their monthly income.
For more information, visit last week’s article appearing in the Wall Street Journal.