New Fed Rule:
Major change is going to hit the industry on 1/14/2012. Yesterday the CFPB announced the Qualified Mortgage Program in a 804 page document that will add new pressures to this industry.
In a nut shell, the Rule tells lenders what they can and can’t do in qualifying people for a mortgage.
Some Examples:
1-Debt to Income Ratios need to be < 43%, which is not all bad, just reduces the persons buying power.
2-Can’t be a negative amortized loan, which I agree.
3-Can’t be an exotic loan, which I don’t do.
But here is the kicker, a borrower who fails on their mortgage, can sue the lender, if the lender didn’t meet the QM criteria.
Yes that is correct, if the borrower, say 3 years down the road, foreclosures on the home, they can SUE the lender.
Now there is a Clause in the Rule, that if the Lender follow all 8 of the guidelines, then there will be a “Safe Haven” for that lender that will prevent a lawsuit. And believe me, I will be following (actually I currently do) all of the CFPB regulations.
AND, if the lender does a FHA, RD, VA, Fannie or Freddie loan, and that Government Entity approves the loan, it will also qualify for the “Safe Haven” rule.
I have put 2 videos to the right for even more explaination.
But here is also the kicker, What happens if the Borrower was referred to the lender by a Realtor. Is that Realtor able to be sued? Some say Yes.
And what if the Builder, who owns a mortgage company or has a affiliated business relationship with a lender, referred the borrower to that lender. Can that builder be sued? Some say YES!
The rule was just released yesterday, so in the coming months you will hear A LOT about it. IT WILL affect our industry so we will keep you updated.
Rates:
Well in the last 2 weeks, more and more Federal Reserve Governors have come up stating that they feel the Fed should start winding down the Qualitative Easing Program #3, #2, #1.
This is the program which has the Federal Reserve purchasing Mortgage Back Securities in order to keep rates low.
So you can see by the above chart, (RED=rates higher, Green=Rates lower) that we had the best rates on November 9th, and since then rates have been going up.
And then there was a HUGE raise in rates on January 3rd, and since then, due to the Federal Reserve indicating they are going to start to close down the QE3 program.
So what does this mean for rates. Well originally the Fed indicated they were going to let rates go up when Unemployment reached 6.5%, but it looks like now that could happen sooner. So we anticipate that October 2nd was the bottom of the rate market, and rates will slowly but surely start to raise.
Circuit Breaker
Many, Many people have asked me about this, and I think it would be a GREAT items for Realtors to call their existing clients to remind them that this is available.
The Idaho Circuit Breaker allow for people with limited income and disabilities to actually pay down to ZIP, ZERO, NADA, in property taxes.
This is above and beyond the Homeowner’s Exemption!
In speaking with some people at the County, VERY few people who qualify for this actually apply for it.
But it is CRITICAL, they have to apply EACH year!!!
I have attached the link HERE to the Idaho Web Site for more information.