New Mortgage Regulation Coming Soon
According to the New York Times, a new rule that was adopted by the Federal Reserve will take effect on October 1, 2009. What’s the new rule mean for consumers looking to buy housing? Here’s the breakdown.
It looks like an end to the “stated -income” loans of the past, which could be a good thing and a bad thing. Consumers who don’t get paid a weekly paycheck, may be out of luck!
You will not be able to go to a lender and “tell them” what you make. In the past we’ve seen a lot of fraud with stated income or no-doc loans. Borrowers could fabricate or inflate their income to a sub-prime lender and buy a home without showing proof of yearly earnings. The Federal Reserve has now put a stop to this. It may be a little too late at this point. We’ve seen destruction happen all across the U.S. because of loans of this type. Borrowers would say they make x when really they make y and they sometimes end up loosing their home in the end because they really couldn’t afford it.
So in some instances it is good that we are putting a stop this type of loan, however we need to look at others who will unjustly be effected by this change.
Anyone who receives cash for work, waitstaff, hostess, chef, bar tenders, etc. If the cash isn’t documented people in these industries are going to have a hard time getting a loan to purchase real estate. Although they may qualify for a sub-prime loan, they will not have the loan types to offer them and they may be out of luck.
If you are thinking about buying a home and would like some information on Mortgages or would just like to talk about your real estate needs, contact Adrienne Francis today at 201-259-4449
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