• ONE
  • Home
  • Lebanon news
  • Lebanese
  • canada
  • Int'l News
  • Finance
  • Social news
  • Entertainments
  • Business أعمال
  • Arts and culture
  • Health صحة
  • Food غذاء
  • Sports news
  • Lifestyle
  • Jobs / Classified
  • Tourism
  • Arab world
  • تاريخ
  • Restaurants
  • CARS
  • Necrology
  • Contact YALLA
  • Carnet d'adresses
    • Aliments
    • Services Financiers
    • Services Médicaux
YALLA LYOM
صوت الاغتراب اللبناني

Analysis: Housing experts warn of hiccups as new U.S. mortgage rules go live

11/1/2014

0 Comments

 
Picture
BY EMILY STEPHENSON AND MARGARET CHADBOURN

(Reuters) - U.S. banks and housing groups are bracing for paperwork headaches and delays as major post-crisis mortgage reforms take effect later this week, but experts say prior warnings of a blow to the housing recovery will not be proven right.

On Friday, lenders must be prepared to verify that borrowers can repay their home loans, under rules written by the Consumer Financial Protection Bureau and required by the 2010 Dodd-Frank Wall Street oversight law.

Banks will have to consider a list of factors that show the consumer's financial health, including income, existing debt obligations and credit history.

The reform seeks to prevent a repeat of the 2007-2009 financial crisis, when millions of people's homes went into foreclosure, in many cases because the borrowers received loans they could not afford.

When it was first introduced, the change spooked both banks and housing advocates, who said a strict interpretation would force lenders to extend loans only to borrowers with spotless credit, potentially derailing the fragile housing recovery.

Along the way regulators softened the rule, easing those fears.

Still, banks have scrambled over the last year to update technology, write new lending procedures and train employees to comply with the requirements. Experts warn consumers could see some disruptions over the next few weeks, including longer mortgage application processing times and paperwork problems.

"We do think there could be some short-term wrinkles in the January-February time frame as the cutover occurs and lenders have to port over to new systems," said Stan Humphries, chief economist at Zillow (Z.O), an online real estate database.

But he said the rules would not have much impact on the larger housing market because regulators broadened a carve-out for the most basic loans, called "qualified" mortgages or QMs.

The ability-to-repay rule had been the most feared of a series of changes looming for mortgage lenders because if borrowers' homes are foreclosed upon, they could claim their banks should have known they could not afford the loans.

Dodd-Frank provides some protection from these lawsuits for lenders who issue qualified loans, which can have no risky loan features, and any associated fees must add up to less than 3 percent of the total loan amount.

In the final version, the consumer bureau said that for the first few years, any loans that are eligible for purchase by Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) count as qualified. That means most of the loans made today would get extra legal protection.

"For the foreseeable future, the vast majority, or roughly 95 percent, of the market will be covered by this QM definition, which is where the market is today," said Peter Carroll, the CFPB's assistant director for mortgage markets, in an interview.

"We do believe that the market will figure out how to make good, responsible non-QM loans, and they'll make them."

Wells Fargo (WFC.N) and some other lenders have already said they will issue non-qualified mortgages to high-wealth clients, though that market is expected to be small.

BANKS LESS OPTIMISTIC

The ability-to-repay rule is just one piece of a set of sweeping mortgage reforms still to come.

Tough new requirements are also set to kick in for mortgage servicers. These firms normally collect payments and communicate with homeowners, but made numerous mistakes after the crisis that led many borrowers to lose their houses.

Regulators also are revamping disclosures banks must issue when making loans, and the U.S. Congress is debating ways to overhaul Fannie Mae and Freddie Mac, though that could take years.

Bank lobbyists are more pessimistic than other housing experts and warn that some lenders will be overly cautious while they are getting comfortable with new requirements.

Many small banks rely on outside vendors to build the technology used to generate loan terms for borrowers. Some vendors made changes as late as December, which could keep some banks from training staff by Friday, said Robert Davis of the American Bankers Association, a trade group.

"Until the vendors have finished tinkering with the systems to get them right, and until bankers are more confident in the robustness of systems and the training of their staffs to use the systems, we believe there's going to be ... a pullback," Davis said.

Some in the mortgage industry still say it could be harder for low-income borrowers to take out a loan because lenders will feel they have less flexibility. But because loan applications take a while to close, it will take a few months to generate data on the rule's impact on the market.

U.S. officials hope to track changes at a group of lenders that would indicate industry trends, the CFPB's Carroll said.

Some financial institutions say while it has been tough, they are prepared. Scott Toler, chief executive of the Credit Union Mortgage Association in Fairfax, Virginia, said on Tuesday his group made some of its final compliance upgrades this week.

He said his company, which provides mortgage services to more than 70 credit unions, modified loan underwriting procedures, retrained employees and upgraded technology systems.

"It's been a lot of work, but we'll be ready," Toler said. "It's been like drinking from a fire hose to stay ahead of the new and constantly changing regulations."
0 Comments



Leave a Reply.


    Picture

    Picture
    COMBIEN COUTE TON ASSURANCE AUTO?
    EN 3 MINUTES TU AURAS LE PRIX!
    Auto: https://auto.ia.ca/fr-CA/chat/auto-vip/?uid=91FBE3

    Picture
    Picture
    Picture
    Picture
    Picture
    Picture
    Picture

    Archives

    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013

Home
Lebanon News
North America
International
Social
Entertainments
Health
Sports news
Marketing plans

YALLA Alberta
Law / Droit
Culinary art & food
Real Estate
Bulletin st Antoine
Arts and Poems
Necrology
Magazine archive
Gift store
Contact us

YALLA website

​©Copyright all rights reserved 
Toute Reproduction interdite
YALLA  2022
Since 2012


Head office: Hamra Street Makhoul Bulding, Beirut, Lebanon
P.O.Box: 90-288
Contact us