With all this talk about financial reform, politics and the Dodd-Frank bill, is there really an impact on the real estate industry and homeowners? It certainly sounds like the Dodd-Frank bill only impacts the ugly, nasty lending industry. As with all things, the problems with the mortgage industry and housing market cannot be blamed on one group. The Dodd-Frank bill is set to completely revolutionize both the mortgage and housing industries, and not necessarily for the better.
First, the bill directly impacts mortgage loan originators and loan officers. These groups are seen as having been on the front lines of the housing collapse by those in Washington D.C. All mortgage brokers are now licensed, qualified and registered via a nationwide system. You can check the status of your lender on the Division of Real Estate’s web site. This is the same regulator that monitors and regulates real estate agents. In addition, the compensation for lenders is being regulated.
As part of Dodd-Frank the Qualified Residential Mortgage (QRM) requirements are changing as well. These changes include: no short sale or foreclosure; borrowers cannot have had an adjustable rate mortgage or bankruptcy in the last 3 years; lenders and regulators have recommended higher down payments requirements. The current down payment for an FHA loan is 3.5%. This is an increase from 3.0% from about a year ago. Locally we did see a slow down in conjunction with the timing of this increase.
Overall, stricter loan rules mean fewer options for borrowers. It will also make it harder for borrowers with any discrepancies on their credit to get a loan. Anything that makes it harder for people to get loans to buy houses will further constrict the housing market.
Kim Iverson
Associate Broker MBA, QSC, SFR, YPN
Look East Realty –Service Beyond the Expected
303-644-4444