Major New 2014 Mortgage Regulations

The real estate and credit meltdown of 2008 has totally revamped the whole mortgage industry.  Thousands of local banks closed their doors or gotten acquired by giant mega banks like JP Morgan Chase, Bank of America, Citibank, and Well Fargo.  Thousands of mortgage bankers and mortgage companies have closed their doors and mortgage loan products such as state income mortgage products became nonexistent.  Mortgage brokers were all required to abide by the newly created SAFE ACT and needed to take national and state exams and undergo federal and state criminal background checks and personal credit checks and financial background checks.  Over half of the mortgage loan originators either left the business or did not qualify for a mortgage loan originator license due to their backgrounds and the elimination of no doc, state income, and sub prime loans.

Creation Of Dodd Frank Mortgage Reform Act

The creation of the Dodd Frank mortgage laws and new mortgage regulatory agencies has sparked creation of new mortgage regulations year after year.  New 2014 mortgage regulations will come into effect on January 10, 2014 that could effect home buyers and those seeking new residential purchase and refinance mortgage loans.  New 2014 mortgage regulations will also set new rules for banks, mortgage bankers, and mortgage brokers.  New 2014 mortgage regulations main focus will be that mortgage lenders will not be able to sell residential mortgage loans that a mortgage loan borrower cannot reasonably pay back.

New 2014 Mortgage Regulations And The Dodd Frank Act

The Dodd Frank Act, which was enacted in 2010 due to the real estate and credit meltdown of 2008, created a new federal mortgage and financial regulatory agency called the Consumer Financial Protection Bureau, also known as the CFPB,  to create and implement new rules and regulations that requires mortgage lenders to analyze and evaluate if a residential mortgage loan to a public mortgage loan borrower is affordable to the borrower.  This new rule and regulation created by the CFPB was mainly not enforced and most mortgage lenders considered this an option whether to implement it in their internal underwriting guidelines.  However,  the Consumer Financial Protection Bureau has now made this as a mandatory rule and part of the new 2014 mortgage regulations that will definitely take effect on January 10, 2014.  Mortgage lenders will need to now confirm and verify and have documentation proving  income, credit history, asset information, all debt obligation, and employment documention on mortgage loan borrowers and use these facts in making a determination if the mortgage loan borrower is capable of repaying his or her new residential mortgage loan.  In the event if the mortgage lender does not comply with these new rules and regulations, the mortgage loan borrower or borrowers who has a hard time making their mortgage and housing payment may sue the mortgage lender who has given them the mortgage loan.

Other New 2014 Mortgage Regulations

The Consumer Financial Protection Bureau has also created new 2014 mortgage regulations and guidelines for QM, Qualified Mortgages which protects mortgage lenders from lawsuits from public mortgage loan borrowers.  To meet the Qualified Mortgage lending guidelines, a mortgage loan borrower will have a cap on their back end debt to income ratio, which will be capped at 43% debt to income ratio of his or her monthly gross income, which will include his new housing payment along with all other minimum monthly credit obligations.

Elimination Of Mortgage Loan Programs

Other mortgage terms and conditions that was offered prior to the collapse of the housing market will be totally banned and mortgage lenders cannot offer it anymore effective January 14, 2014.  For example, any residential mortgage loan products over a 30 year fixed rate product will not be allowed such as 40 year fixed rate mortgage products.  Other banned mortgage loan products are the optional mortgage payment for a mortgage loan borrower to pay less than the minimum monthly interest payment.  This will not add the balance on the mortgage balance of the borrowers mortgage.    Balloon mortgage loans are another product that was very popular prior to the real estate market collapse will now be banned permanently.   Mortgage lenders will be capped at 3% on fees and points they can charge mortgage loan borrowers.

New Mortgage Regulations For 2014

By implement the new 2014 mortgage regulations and if mortgage lenders follow the new rules and guidelines for new mortgage loans already in place for good credit mortgage loan borrowers, mortgage lenders will have great protection against law suits from defaulting mortgage loan borrowers.  On the flipside, it will be much tougher for a mortgage loan borrower to get qualified for a mortgage.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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