“Ability to Repay Rules”
There are many rules that have come into play in the mortgage industry over the last few years, but more so in 2015. When it comes to the ability to repay a mortgage the repayment rules should be pretty obvious, but in some cases these rules have gotten out of hand.
There were many loan types that were created that should never have been allowed as many got into trouble. Sure, greed came into play very often and abuse became part of the mortgage landscape. There were lots of foolish consumers that participated that had no business taking out some of these loans.
We have now come full circle and gone to the other extreme. Here is a perfect example when it comes to Government loans. I was sitting with a client the other day to do a mortgage application and the loan can’t be done because of new FHA guidelines.
This borrower has co-signed student loans for his child, totaling $118,000. Even though they are deferred for the next two years we now have to show a payment equal to 2% of that amount and in this case that would be $2360. Without this payment the debt ratio is 44% and under normal circumstances an easy loan to do for the client but including the student loan payment, the debt ratio is 69%.
This is now the third loan this month that I could not do because of the “ability to repay” rules, the new and improved rules that are supposed to protect the consumer “from themselves”. This is only one example. There are many more and we wonder why homeownership in this country is at nearly a 50 year low.
I would really like to hear your thoughts on this topic.
Image courtesy of stuartmiles/freedigitalphotos.net
Subscribe to my blog via Email:
Joe Petrowsky, NMLS #6869
Right Trac Financial Group, Inc. NMLS #2709
110 Main St.
Manchester, Ct. 06042
Office: 860 647-7701 x116
Fax: 860 647-8940
Cell: 860 836-9294
Joe Petrowsky does not guarantee nor is in any way responsible for the accuracy of the information provided herein, and provides said information without warranties of any kind, either expressed or implied.
Equal Housing Statement: We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. We encourage and support an affirmative advertising and marketing program in which there are no barriers to obtaining housing becuase of race, color, religion, sex, handicap, familial status, or national origin.