Aimed at protecting borrowers against risky and uncertain lending practices, new mortgage rules were launched in US. With the introduction of new rules the two terms that you now should be aware of are: Ability-to-repay and Qualified Mortgage.
The first rule, Ability-to-repay, assures if a borrower can afford the loan over long term and it will involve thorough checking of applicantâ€™s assets, savings, incomes and debts. Thus it will require borrowers to present even more detailed tax records and information about their investment and bank accounts.
Next is the Qualified Mortgage that borrowers can avail if they are eligible as per the requirements listed in Ability-to-repay rule. Some guidelines have been set, such as there should not be any risky features, like interest only repayments and terms that continue for more than 30 years. Qualified Mortgage loans are required to meet as many guidelines as they possibly can. It is still possible for lenders to issue loans without considering these QM guidelines. However then they will not get as much protection against lawsuits in future.
Although the new mortgage rules are introduced to lower the risks in mortgage market, but they are bound to make the scenario complicated for those who do not have constant income. Also, individuals who are self employed might find it difficult to validate their income. Initially the new rules are also expected to cause delays in mortgage lending, thus posing some tough challenges for both, lenders and borrowers, to cope up with.
Ratebeat NMLS Number : NMLS NO1267188
Registered New York Mortgage Broker – All mortgage loans arranged with third party providers.
Figure: 7 TAC §80.200(b)
“consumers wishing to file a complaint against a company or a residential mortgage loan originator should complete and send a complaint form to the texas department of savings and mortgage lending, 2601 north lamar, suite 201, austin, texas 78705. complaint forms and instructions may be obtained from the department’s website at www.sml.texas.gov. a toll-free consumer hotline is available at 1-877-276-5550. the department maintains a recovery fund to make payments of certain actual out of pocket damages sustained by borrowers caused by acts of licensed residential mortgage loan originators. a written application for reimbursement from the recovery fund must be filed with and investigated by the department prior to the payment of a claim. for more information about the recovery fund, please consult the department’s website at www.sml.texas.gov.”