Since the recent housing crisis occurred, the Consumer Financial Protection Bureau is continuing their work to create specific rules designed to protect home buyers. Dean Graziosi states that as these new rules reach the public, potential buyers are reading about how lenders will deal with these rules. Lenders are discovering how the can work within these new rules while still limiting the amount of risk they take on borrowers, says Dean Graziosi. To help you better understand how these rules, and specifically the Qualified Residential Mortgage rule will affect you we have put together some helpful information.
The first of these new changes that lenders are faced with is that of risk sharing. This was created by Federal regulators who have determined that many of the questionable loans made prior to and during the housing crisis were made with the understanding from lenders that any loan they approved would eventually be sold to a secondary group of investors. This allowed lenders to make risky loans without suffering any of the consequences once that loan was sold. This potential new rule may make originating lenders responsible for some portion of all loans that they approve, states Mr. Graziosi. Needless to say, many lenders are not pleased about this and it may actually cause lenders to become more reluctant to approve new loans.
The good news for potential borrowers is that a compromise may be possible through a qualified residential mortgage. The idea behind this is that a qualified residential mortgage would be a loan that would be considered a safe medium by lenders. If a lender meets the criteria for this type of loan, they will not be required to assume any of the risk associated with the loan and will be protected from any future liability on that particular loan, explains Mr. Graziosi. The only thing that needs to occur now is for the Consumer Financial Protection Bureau to finalize and specify what would constitute a qualified residential mortgage.
What this all comes down to for borrowers is that lenders will do everything they possibly can to ensure that they can provide you with a qualified residential mortgage. This is primarily because these types of loans are seen to be less risky for lenders. These new guidelines will also make potential borrowers more aware of their existing credit standing, because the ability to be approved for this type of loan will be based on how big of a risk they are initially. If you are planning on purchasing a home in the new future, you may want to consider asking about this new financing option.