Monthly REIA Meeting








What’s New in 2013 ????

Charlotte REIA monthly meetings
are now being held for the first time

SATURDAY the THIRD Saturday of EVERY month

@ 8:30 AM

NEXT Monthly Meeting is February 16th 2013 -

This month @The Charlotte REIA Monthly Meeting to welcome our guest  

Members are FREE

Guests are $ 20.00  Bring a guest and get 50% off


Readers Corner

The Consumer Financial Protection Bureau today released its first in a
series of major rules that will shape the future of mortgages. The hotly
contested measures, mandated as part of the 2010 Dodd-Frank financial reform
bill, are generally somewhat less stringent than consumer groups wanted, and
less onerous than lenders feared.

There are two parts of the new rule (PDF). The first part isn’t very controversial and
applies to all mortgages. It requires lenders to evaluate whether a borrower
will be able to repay a loan. What a novel idea, right? Well, this wasn’t the
law before in most cases. Under the new rules, the CFPB says lenders must
consider at least eight specific criteria, including a borrower’s income,
assets, credit history, debt obligations, and employment status. Lenders must
verify and document this information—so no more “no
” loans. The CFPB just tells lenders what
to look at, not how
to evaluate if the borrower has the ability to repay. That’s up to the lender’s

The second part of the law creates a new category called a “qualified
mortgage.” Remember that phrase—you can expect to hear a lot more about it
because it’s likely to become the new standard mortgage in the country. To be
considered “qualified,” mortgages must follow specific product and underwriting
criteria. They can’t have some of the features that proved to be disastrous in
the housing bubble: terms longer than 30 years, structures where the principal
balance increases (aka negatively amortizing loans), balloon payments, and fees
and points that cost more than 3 percent of the loan. On the underwriting side,
the most important new factor is that the borrower can’t have a debt-to-income
ratio above 43 percent, meaning they can’t spend more than 43 percent of their
monthly income paying debts, including mortgages, credit cards, and child

Here’s where the legal part kicks in. If a lender follows these criteria
when lending at the prime
interest rate, they will have strong protection from many lawsuits by
consumers. The lender gets the benefit of the doubt that it properly assessed
the ability of the borrower to repay, so a borrower will only be able to
challenge whether the loan was truly “qualified.” If the loan has a subprime interest
rate, consumers will have more legal options. A borrower will be able to say
that even though the loan fit the “qualified” terms, the lender should have
nonetheless determined that the borrower couldn’t really afford the loan. The
bureau made this distinction because it says subprime borrowers tend to be more
vulnerable to unscrupulous lending, a senior CFPB official said on a background
conference call with reporters.

To make things even more confusing, because these changes are so massive
and come at a time when the mortgage market is still fragile, the bureau is
building in a transition period. During this period—which will phase out over
seven years—loans will be considered “qualified” if they follow the standards
set by
Fannie Mae (FNMA), Freddie Mac (FMCC), or other government housing agencies, even
if those standards differ from the CFPB’s.

Alys Cohen, a staff attorney at the National Consumer Law Center, said in a
statement that the qualified mortgage rule “invites abusive lending and erodes
the progress made by Dodd-Frank.” She said the legal safe harbor for prime
qualified mortgages provides “absolute shelter” for reckless lenders and that
the 43 percent debt-to-income ratio was too high for lower-income borrowers.
The Center for Responsible Lending generally praised the rules, calling them a
“reasonable approach to mortgage lending—for the most part.” In a statement,
CFPB Director Richard Cordray said that “no standard is perfect, but this
standard draws a clear line that will provide a real measure of protection to
borrowers and increased certainty to the mortgage market.”

The bulk of the new rule is final and set to go into effect in January
2014. The bureau has walked back from a finalized rule before, but that’s unusual for regulators, particularly for
regulations of this magnitude. In the coming weeks and months, the bureau plans
to unveil other mortgage regulations, including standards for servicing loans,
compensation for loan officers, and a simplified disclosure form. A whole new
mortgage world is coming soon.



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  • A former member
    A former member

    I will be there if I don't fly. I am playing this by ear, but I stand a good chance of attending. :)

    April 19, 2013

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