An analysis of home loans showed that 1 in 5 current mortgages would not meet the qualified mortgage safe harbor standard that goes into effect in January.
What the New Rule Means for Borrowers:
AOL Real Estate: Under a provision in the Dodd-Frank Act, lenders must verify a mortgage applicant's ability to repay the loan. A borrower's debt-to-income ratio must be 43 percent or lower, plus the mortgage rate needs to be close to the national average prime mortgage rate (within 1.5 percentage points for first-lien loans and within 3.5 percentage points for subordinate-lien loans). The new QM thresholds take effect Jan. 10, 2014, which will not only impact lenders' liability, but also consumers' ability to qualify for home loans.
Read more: http://realestate.aol.com/blog/2013/10/23/dodd-frank-qualified-mortgage-standard/
Marketwatch: “The average credit score among borrowers who received a mortgage in September was 732, down from a peak of 750 a year prior…. To be sure, the bar to getting a mortgage remains high. Applicants who were denied a mortgage in September had an average FICO score of 696 …”
Read more: http://www.marketwatch.com/story/mortgage-lenders-ease-credit-score-standards-2013-10-16
The Toledo Blade: ”…the regulations also could have the unintended effect of making it more difficult for many working-class families to qualify for mortgage loans offered by major banks.”
Read more: http://www.toledoblade.com/Real-Estate/2013/10/13/Middle-class-buyers-may-feel-squeeze-of-new-mortgage-rules.html
How are the Banks Doing?
Charlotee Observer: “SunTrust Banks said Tuesday it will eliminate 800 jobs nationwide, including in Charlotte, the result of a slowdown in its home-loan refinancing business.” “ … with mortgage rates rising this year, lenders have seen weakening demand for refinancing loans. That has led banks, including Charlotte-based Bank of America and San Francisco-based Wells Fargo, to trim the work force that processes those applications.”
Read more: http://www.charlotteobserver.com/2013/10/15/4390442/suntrust-to-eliminate-charlotte.html#.UmfsWvkWKQA