Your Mortgage and The Ability To Repay Rule

The CFPB (Consumer Financial Protection Bureau) "Ability to Repay Rule" went into effect January 10th. This rule is designed to protect consumers from debt traps by requiring mortgage lenders to evaluate whether borrowers can afford to pay back the mortgage before signing them up. The rule was required by Congress, as a response to the financial crisis and nationwide foreclosure epidemic.

It's important to be able to separate Fact from Fiction with regard to these new rules.  If you are a consumer looking to purchase or even sell a property, invite your local lender to go over all of your options before taking the next step, it will make the process less stressful and in the end probably go much smoother.

The CFPB has put out a FACT vs FICTION   (You may  read the entire piece  by clicking HERE : )  Here are a few of the clarifications that the piece covers.  

Fact vs. Fiction

1. Fiction: The CFPB’s Ability-to-Repay Rule will cut off consumers' access to credit by requiring all loans to be Qualified Mortgages.
     Fact: The Ability-to-Repay Rule does not require lenders to offer any specific type of mortgage. Lenders can offer any mortgage they believe a consumer has the ability to repay, as long as they have documentation to back up their assessment. Not all loans will be Qualified Mortgages.


2. Fiction: Banks aren’t going to make any loans that are not Qualified Mortgages.
     Fact: The Ability-to-Repay Rule is designed to protect consumers without disrupting the U.S. housing market. Some of the nation’s largest banks have already said they plan on making loans that fall outside of the Qualified Mortgage guidelines.

More importantly, however, the vast majority of loans being made today are already compliant with the Qualified Mortgage guidelines. The CFPB estimates that roughly 92 percent of mortgages in the current marketplace meet the Qualified Mortgage requirements, and reports by independent economists have confirmed the Bureau’s calculations.

(click Here) for the other 5 Fact vs Fiction from the CFPB. 

Will sellers be reluctant to accept offers from buyers who will require financing? As of today, it’s still too early to know how real estate transactions and the market will be impacted by the Ability-to-Repay and Qualified Mortgage rules  (Read more here).

Stay in touch with your Local Lender and stay on top of how these new rules are impacting consumers.