2013 saw a rise in both U. S. home prices and home sales. In fact, property values throughout the country are up more than 17 percent since 2011. Even though national rates of growth have shown clear signs of moderate, continual growth over the course of the year, October seems to have given way to an overall slowdown in home purchasing and refinancing.
Aside from the typical winter seasonal slowing of home sales, analysts believe the impending January 2014 implementation of new mortgage industry regulations by the Consumer Financial Protection Bureau (CFPB) are an additional catalyst to the slowing numbers.
“The impact of the upcoming Qualified Residential Mortgage rules have caused pause in the lending and consumer mortgage realms,” Wade Betz, Vice-President/Sales at Guardian Mortgage Company, said. “The new rules will require a lot more time, documentation and scrutiny in order to process mortgage loans.” As such, many believe lenders may be heisting in order to ensure compliance with the regulations, as anything other than prime mortgages will become relatively restricted.
Some in the mortgage industry warn that the new rules will prevent or scare away potential borrowers from applying for and accessing mortgage credit. In addition, the new rules require additional expenses in order for lenders to meet compliance. These expenses are expected to be felt by future mortgage borrowers.
“This ironic increase in origination and processes expenditures could possibly impact borrowers as they may increase points and fees, which can determine whether a loan can qualify or not under the QRM and QM rules,” Betz said.
So what is the takeaway of the January implementation? Mortgage lenders and agencies should continue to prepare by incorporating the required training and monitoring requirements of the CFPB rules. Future home borrowers should start planning on a longer, more document-heavy process and possibly, an increase in fees and down-payment requirements in order to achieve home ownership success in the future.
Marcus McCue |
EVP & CBDO