For more than a year, Cornerstone Mortgage has been gearing up for the changes in the mortgage industry. We have had fair warning about the new rules and were fully prepared for January 10th, 2014, the day the regulations drawn up by the (CFPB) Consumer Financial Protection Bureau went into effect.
Many cringe at the thought of more regulation, compliance & the possibility of not being able to obtain a home loan. These are very real concerns. To be frank, there is not enough room on this blog for all the changes, as the Act is thousands of pages long but here are a few of the basics.
A large portion of the rule are Qualified Mortgages. QM sets a minimum standard for all lenders to ensure they only make loans to borrowers who have the ability to repay the loan.
Qualified Mortgages are based on some common-sense ideas:
- The borrower should be able to repay the loan.
- The terms of the loan should be safer for borrowers.
- The loan should also be easier to understand. That means you won’t see QMs with complicated and risky features such as negative amortization or interest-only periods. (For more on the CFBP's definition: Qualified Mortgage)
In addition, the new regulations provide that there will be:
- no balloon payments
- no terms over 30 years
- points & fees cannot exceed 3%
For most borrowers, the change will have little or no impact on whether they can actually get a mortgage, but there may be more loopholes to prove that they can afford one. We are here to help!
All of these regulations are things that could put smaller lenders out of business, but are the reasons Cornerstone Mortgage is here to stay.
Please contact us for more information on how these changes impact you.
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