How will the lending rules (that change Jan. 1st 2014) affect interest rates and home prices and how long do you think that will take to take affect?

Asked by John Marcella, Bozeman, MT Mon Dec 9, 2013

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Ryan Olsen’s answer
Ryan Olsen, Agent, Bozeman, MT
Mon Dec 9, 2013
This is a great question. Bloomsberg Business Week has a great short article about this. Lenders must now verify and document at least eight specific criteria, including income, assets, credit history, other debt obligations, and employment status, to determine whether a borrower has a reasonable chance of repaying the loan. If the lender doesn’t do all that, a homeowner who has trouble repaying the loan has grounds for a lawsuit. As for how this will affect the real estate market? This will be better for everyone because there won't be the quickly inflated prices and then bursting real estate bubbles.
1 vote
Tony Grech, Mortgage Broker Or Lender, Southfield, MI
Mon Dec 9, 2013
Tony is right. Speculation.

I speculate that the majority of banks/lenders will adhere to the Safe Harbor guidelines, under which less borrowers will be eligible for mortgages.

Some borrowers will funnel towards FHA, which generally costs more when you factor in the PMI requirements.

There will probably be niche providers who offer private-label financing as well. My guess is that the cost will be higher for these loans as well since there will be more risk to the lender...they won't have the ability to sell the loans to Fannie or Freddie.

Our government is putting these guidelines in place to "protect the consumer" so I have no doubt they will screw things up and this will wind up making things tougher on consumers as well as hard working loan officers whose livelihoods depend on being honest and ethical and helping their customers obtain mortgages.

We shall see...
1 vote
P.L.S. Tony…, Agent, Belgrade, MT
Mon Dec 9, 2013
Answers to your question are not able to be definitively known at this time, although you may get those who will speculate about it.
P.L.S. Tony Novotny Broker/Owner
0 votes
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