Mortgage Changes to Know in 2014

RISMEDIA, Thursday, December 19, 2013— The New Year is almost here, and with it comes a bevy of legal and regulatory changes, especially for the mortgage industry. To help potential homebuyers understand how the changes will affect their mortgage processes, Don Frommeyer, CRMS, President of NAMB (The Association of Mortgage Professionals), outlines some of the regulations set to start in January 2014.

“Since 2009, the housing market has been working to create standards and regulations that minimize the risk of another mortgage industry fiasco,” says Frommeyer. “The ability-to-repay mandate is a perfect example of this and it exemplifies how mortgage professionals are taking extra caution with every customer.”

Upcoming mortgage industry changes include:

- Ability-to-Repay Mandate: The CFPB designed this regulation to set a gold-standard for lending to ensure each and every borrower is a qualified borrower. Lenders will follow a set of guidelines to establish a consumer’s income, assets and obligations before deeming them eligible. The CFPB rules establish a standard for what the government considers a “qualified mortgage.”

- Decrease in FHA Loan Limit: The Federal Housing Administration (FHA) announced that beginning January 1, 2014, mortgages will be limited to $625,000, down from $729,750. Homebuyers looking to obtain a larger loan will have to apply for a jumbo loan, which will most likely come with a higher down payment. “For many areas of the country this change won’t be a huge issue as average home prices fall below the established limit. However, borrowers in metropolitan areas with higher average housing prices may face challenges when applying for mortgages as the 20 percent down payment associated with jumbo loans will be an enormous increase from a traditional loan’s 3.5 percent down payment,” notes Frommeyer.

- Caps on Loan Origination Fees: January 10, 2014 brings a rule for the Qualified Mortgage that points and fees on mortgages cannot exceed 3%.

- Tighter Regulations for Self-Employed: As the rules to create a QM (qualified-mortgage) take effect, people without a W-2 will face difficulty when they apply for loans. It’s more of a task for individuals to prove their debt-to-income ratio without the proper documentation, even if they have a high net-worth and perfect credit. The income is calculated bringing into play the customer write offs to reduce taxable income.

For more information, visit www.namb.org.
If you are in the Savannah area, you can also call Kirsten Ray with Fidelity Bank:
Kirsten Ray
Fidelity Bank
200 Stephenson Ave
Suite 101
Savannah, GA 31405
912-692-8022                              

A. Joseph Marshall
Coldwell Banker Commercial
Commercial Real Estate Advisor
Savannah, Ga
912-790-6999

Real Estate Q&A: How the Self-Employed Can Get a Mortgage

Real Estate Q&A: How the Self-Employed Can Get a Mortgage

By Gary M. Singer

RISMEDIA, Saturday, December 14, 2013— (MCT)—Question: I am self-employed and make a good living. I want to buy a house, but it’s hard to document my income. So I’ve been getting turned down for a mortgage, even though I’m willing to make a large down payment. Any hope for me? —Trevor Answer: With banks and the federal government tightening lending requirements, it has become increasingly difficult for people who don’t get regular paychecks to qualify for loans. Although still rare, “stated income” loans are making a comeback. But they require very high credit scores, large down payments and deep cash reserves. If this is not available, you will have to try to get a loan based on your tax returns. Still, this can be difficult because the self-employed tend to use expenses to offset their net income, resulting in low numbers. That forces them to choose between favorable tax treatment or getting a loan. If you can’t find a loan from a traditional bank, there are a growing number of private lenders. Some, such as “hard money” lenders, will offer a smaller amount based only on the value of the house, perhaps lending 50 percent of its value. Others also will look at your credit, income and debts and lend larger amounts. Because these kinds of loans are risky for the lender, be prepared to pay a higher interest rate and higher closing costs. Shopping around is especially important with these loans because the costs and rates vary greatly from one lender to another. Gary M. Singer is a Florida attorney and board-certified as an expert in real estate law by the Florida Bar. ©2013 Sun Sentinel (Fort Lauderdale, Fla.) Distributed by MCT Information Services RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com. A. Joseph Marshall Coldwell Banker Commercial Commercial Real Estate Advisor Savannah, Ga 912-790-6999