The biggest news this week is all about the Consumer Financial Protection Bureau’s new regulations of the mortgage industry.
The CFPB announced a slew of new mortgage regulations Thursday that are going to have a major impact on the housing market. Whether they are for the betterment of the market and its borrowers is yet to be seen, and it’s the major topic of debate for many consumer advocates and bankers.
The center of the regulation is the ability of borrowers to repay a loan. Under the new rules, lenders will need to consider eight criteria in determining whether a borrower is able to take on the financial obligation of a mortgage. Consumer advocates and bankers are looking at the debt-to-income ratio in particular, since the CFPB intends to cap it at 43 percent.
Some consumer advocates are concerned that the new regulations could create a safe haven for lenders and make it more difficult for borrowers to pursue legal action against lenders if they foreclose.
The fiscal cliff has been averted… for now, at least. But what does that mean for your tax return this year? We looked at five major effects of the legislation.
One of the most important changes that will impact everyday Americans is the increase in the payroll tax. In 2011, the payroll tax rate was cut by Congress from 6.2 percent to 4.2 percent to help Americans dealing with the recession and its aftermath. That temporary reprieve expired Jan. 1 and the rate is now back up to 6.2 percent. Those extra two percentage points may seem small, but they can mean thousands over the course of a year.
Especially relevant given the news this week on the CFPB’s mortgage regulations, we looked at the main reasons that many prospective homebuyers are being rejected for a mortgage.
Rejections are much more common than you may imagine, and they can be for small reasons like an error on your credit report. However, there are some major reasons you can get rejected that are entirely preventable. Making sure you are fully employed and can prove your income to a lender is important, as is having enough cash on hand to cover closing costs, realtor fees and a down payment.
Image: NS Newsflash, via Flickr