Changes In Mortgage Guidelines On Government And Conforming Loans


Changes In Mortgage Guidelines On Government And Conforming Loans

This BLOG On Changes In Mortgage Guidelines On Government And Conforming Loans Was Written By Ron Granado of Gustan Cho Associates Mortgage News

FHA has made over 20 changes on as a result of the growing pressure from the Consumer Finance Protection Bureau to abide by the Ability to repay rule(i.e. qualified mortgage).
  • As a result, more documentation will be required, and more stringent guidelines will be in place
  • Mortgage rates is the highest it has been since 2019
  • Both HUD and Federal Housing Finance Agency (FHFA) has increased loan limits on FHA and Conforming Loans due to rising home prices
  • HUD and FHFA has increased loan limits for two years in a row

Changes In Mortgage Guidelines On Student Loans 

The most notable one is the one that will affect first time buyers the most.
  • If you have student loans, and they are deferred, 1 percent of the balance will be counted against borrower every month on FHA Loans
  • Here is an example: $50k in student loans equals $500 a month extra debt the banks will assume borrowers have as a monthly debt obligation
  • This makes further decreasing purchasing power when qualifying
  • The solution is to provide proof of the full payment, or installment agreement between customer and servicer on FHA Loans
  • Conventional Loans allows Income Based Repayment (IBR) to be used as long as the IBR Payments reflect on borrowers credit reports
  • VA exempts deferred student loans that are in deferment for longer than 12 months
    • On non-deferred student loans, VA requires lenders to take 5% of the outstanding student loan balance and dividing it by 12 months
    • The resulting figure will be used as the monthly student loan payment
  • USDA student loan guidelines are the same as FHA

Changes In Mortgage Guidelines FHA Versus Conforming Loans

It is becoming increasingly clear that Fannie Mae and Freddie Mac are opening up their guidelines a bit:
  • FHA is going in the opposite direction now
  • First time buyers are saddled with tens, if not hundreds of thousands of student loan debt
  • Having them deferred can no longer be the approach banks will look at when accurately assessing debt obligations
  • There needs to be another option
  • Too many states have their own restrictions as to what kind of programs a lender can offer in their state
  • Stated income is not allowed in many states where the crash was hitting Americans the hardest
  • If people want programs to open up, they must push for their local politicians especially in the state legislature and senate to open up lending guidelines with  the attorney General within that state

Mortgage Rates And Mortgage Market News: Stock Market

Rates have shown signs of dropping as a couple things occurred in the past two weeks:
  • Chinese and European markets continue to show signs of weakening
  • The stock market, which relies heavily on European imports have dropped steadily this past week after an almost unstoppable six year Mega Bull Run trend
  • There may be a short term flight to bonds, even s there are fears China may liquidate their bond holdings here to raise capital
  • There are suspicions that a correction may be in place
  • As prices continue to rise, even as rates sty low, if you are confident in the local job market, even if you may move to another job
  • I would say look now
  • If planning on being transient, and don’t see your state as a 5-10 year destination, I would to wait or look elsewhere
  • Regardless, patience now may no longer be a virtue the clock on affordability may be slowly ticking some markets
  • In others, like the Midwest and South east, the prices are just starting to take off
  • The coastlines have already passed the point of bubble return
  • You now have to compete with cash buyers from other nations like in Northern  California, and Hawaii, and Seattle, who pay cash and will outbid the average American buyer to get the house
  • Play the game but play wisely

Mortgage Market News And About Ron Granado

Mortgage Market News was written by Ron Granado of Plymouth Guaranty Corp. Ron Granado is a guest financial writer for Gustan Cho Associates and a veteran real estate and mortgage market expert.  Ron Granado is sought by many real estate professionals such as real estate attorneys, real estate agents, mortgage professionals, and bankers for his extensive knowledge in compliance and industry regulations in the real estate and financial markets.

Ron Granado

Account Executive | Plymouth Title Guaranty Corp

1301 W. 22nd Street | Ste 505 | Oak Brook, IL 60523

  1. Gustan Cho, NMLS 873293 says

    There has been many changes in mortgage guidelines. Both HUD and the FHFA has increased their FHA and Conforming loan limits due to rising prices of homes for two years in a row.

  2. Gustan Cho, NMLS 873293 says

    Ron Granado is an expert in the mortgage industry and is a contributing writer for Gustan Cho Associates Mortgage News.

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