While I was hoping for some sort of reform in the way that loans were being done, I wasn’t expecting what we are getting now. The regulators were trying to find a way to tame down the losses going forward on residential mortgages, and of course now we are wondering where their thoughts are headed. I want to see borrowers make more of an investment in the home upfront, but I am not so sure they came up with a good answer.
Qualified Residential Mortgages
The new terms for a qualified residential mortgage are 20% down for a home purchase, but the surprise is in the rest of the terms too that aren’t much better. Borrowers will need to put down 25% of if they are going to refinance the mortgage and 30% if they wish to do cash out refinance. The only loans that won’t be affected by these changes are FHA loans and any other federally funded loans. As you know, I am an FHA specialist so I am pro the FHA loan programs. The FHA programs are structured differently to begin with, and while they offer low down payments to first time homebuyers, they also are designed to keep the borrowers in the home; not on the streets. I am all for reform, but there is such a thing as being so strict that we close off the opportunity to bounce back.
-Mayer Dallal
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