The mortgage industry has made some New Year's resolutions for 2014, some of which include the following:
Tighter Regulations for Self-Employed
The aforementioned changes to the Qualified Mortgage process will also make it more difficult for self-employed folks, who typically don't have to mess with a W-2, to qualify for loans. This is primarily due to the fact that without a W-2, self-employed people face an uphill battle trying to accurately prove their income-to-debt ratio.
Caps on Loan Origination Fees
The fees and points associated with a Qualified Mortgage were capped at 3 percent, which started on Friday, Jan. 10th.
Decrease in FHA Loan Limit
In 2014, the Federal Housing Administration (FHA) has deemed that a mortgage cannot exceed $625,000, down from $729,750 in 2013, a $104,750 decrease. Potential home buyers who want to secure a loan larger than $625,000 need to specify "jumbo loan" on their application. Of course, this type of loan will almost certainly require a larger down payment.
Don Frommeyer, CRMS, President of the Association of Mortgage Professionals, or NAMB, said that, while this change shouldn't have a significant impact on most of the country, borrowers seeking homes in areas that have a relatively high average selling price might be scared away from the 20 percent down payment inherent to jumbo loans, compared to the approximately 3.5 percent down payment on a traditional loan.
The CFPB (Consumer Financial Protection Bureau) created the Ability-to-Repay Mandate in order to establish the "gold-standard" for lenders to make sure borrowers are actually qualified to be a borrower.
Lenders will use a specific set of required income, assets and obligations guidelines, created by CFPB, to determine if potential loan borrowers qualify before ruling them eligible. These new guidelines create the defining standard for what the government considers a “Qualified Mortgage.”
For more information, surf on over to www.namb.org (National Association of Mortgage Brokers).
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