New Orleans Real Estate - New Mortgage Lending Rules
The Federal Reserve just announced yesterday that it has approved some new lending rules in response to the current subprime loan/real estate issue. The new rules are specifically tailored to subprime loans and are meant to protect consumers from "shady" mortgage lenders. How does this effect us in New Orleans? Take a look at a few of the new rules and they may very well apply to you:
- Prohibit creditors from extending credit without regard to a consumer's ability to repay the real estate loan from income and assets other than the home's value. The lender complies, in part, by assessing repayment ability based on the highest scheduled payment in the first seven years of the loan.
- Require creditors to verify income and assets they rely upon to determine repayment ability
- Ban any prepayment penalty if the payment can change in the initial four years. For other higher-priced loans, a prepayment penalty period cannot last for more than two years.
- Require creditors to establish escrow account for property taxes and homeowner's insurance. This rule will be phased in during 2010.
Keep Reading: New Orleans Real Estate - New Mortgage Lending Rules
This New Orleans real estate tip of the day was provided by Darryl Glade, Realtor with RE/MAX N.O. Properties. Darryl can be reached at firstname.lastname@example.org or by phone at 504.451.8960. Darryl's office is conveniently located in Uptown New Orleans at 8001 Maple Street. Darryl works throughout the Greater New Orleans area including Uptown, Lakeview, Broadmoor, Mid-City, Metairie, Kenner, Westbank, French Quarter, and the Warehouse District.
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