QM changes are around the corner

[road2freedom]

Here's an updated article discussing the impacts of mortgage credit availability with conventional loans: http://finance.yahoo.com/news/mortgage-credit-declines-ahead-qualified-154412865.html

 

Some important points

• Expect conventional loan DTI requirements to drop to 43% for most borrowers
• Those wishing to exceed 43% will be looking at 70% LTV or less
• Points and fee caps of 3% (is this including rate buy downs and LPMI too??)

 

I believe the conforming limits are expected to be lowered too January 1st but I haven't been able to find a specific amount yet. This all seems counterproductive considering where the market is headed, so hold on tight. It's going to be a bumpy ride.

[cinderella]

This could have a very negative impact on the market.

 

I'm surprised there are not more responses.

 

Many loans are approved at > 43% DTI.

 

Between the rising interest rates, back and forth on loan limits, and the new QM guidelines, this has the potential to really strain the market. The pool of potential buyers will shrink with QM rules.

[DallasLoanGuy]

all of these rules are designed to help/protect the consumer from the big bad banks

[road2freedom]

This could have a very negative impact on the market.

 

I'm surprised there are not more responses.

 

Many loans are approved at > 43% DTI.

 

Between the rising interest rates, back and forth on loan limits, and the new QM guidelines, this has the potential to really strain the market. The pool of potential buyers will shrink with QM rules.

 

The pool will definitely shrink and the companies that have been raking in decent returns will have to decide if they want to lower their projected incomes or take on more risk without being handheld by the government. This does seem counter-intuitive to market revitalization and especially to job creation. We've already seen that the first things companies reduce is workforce because, quite frankly, it's the easiest.

 

all of these rules are designed to help/protect the consumer from the big bad banks

 

I don't think it would necessarily be a bad thing to go back to the days where home ownership wasn't for everyone. It will be monumental shift back to the mentality of the pre-Clinton days (not getting political, just using it as a marker) and to be honest, I don't think the "big bad banks", as you put it, are going to be all that willing to settle for less money now that they have a taste of a free for all market.

 

I still haven't found any numbers on conforming limit changes, and it's almost November.

[DallasLoanGuy]

 

I still haven't found any numbers on conforming limit changes, and it's almost November.

 

 

those will come from the GSEs, not the banks

 

and i had my tongue in my cheek when i posted that last commennt.

 

ONLY the federal govt can succeed in lowering my pay and raising rates/fees at the same time. LOL

[road2freedom]

 

 

I still haven't found any numbers on conforming limit changes, and it's almost November.

 

 

those will come from the GSEs, not the banks

 

and i had my tongue in my cheek when i posted that last commennt.

 

ONLY the federal govt can succeed in lowering my pay and raising rates/fees at the same time. LOL

 

 

Yeah I get that, I'm just surprised we haven't heard a number... and my fear is that they won't announce it in time to let any backlash correct it before it goes into effect. If they drop it to, say $380K, I'm willing to bet there would be a huge amount of push-back, and for us personally that would not be a fun scenario. The only thing I found was a best guess of a reduction to $400K in most markets. Any amount is bound to have a pretty significant impact to applicants hoping to close in 1Q14.

 

I got your tongue in cheekiness. We have quite a bit of questionable things coming out of our "leadership" these days. I guess we'll all just hold on tight.

[SnowdIn]

 

 

I don't think it would necessarily be a bad thing to go back to the days where home ownership wasn't for everyone.

 

I agree Maybe it's because I'm in a low housing cost area, but I'm left wondering how so many people are pushing conventional limits- what kind of incomes do they have?? And it pushing DTI limits really a good idea? I think it would be interesting to see a summary of rate of mortgage default by DTI. Then again I'm at ~23% front and back end (no debt other than mortgage) and I feel like that really pushed my budget.

[road2freedom]

 

 

 

I don't think it would necessarily be a bad thing to go back to the days where home ownership wasn't for everyone.

 

I agree Maybe it's because I'm in a low housing cost area, but I'm left wondering how so many people are pushing conventional limits- what kind of incomes do they have?? And it pushing DTI limits really a good idea? I think it would be interesting to see a summary of rate of mortgage default by DTI. Then again I'm at ~23% front and back end (no debt other than mortgage) and I feel like that really pushed my budget.

 

 

Yeah, the problem is it's relative. They already address this with some high cost area adjustments, but it almost seems like this would be better handled by City or County across the board, and updated annually based on tax rolls or average appraisals or something along those lines. Some areas will always be higher cost due to differentiated economies. In our old home town I could literally get twice the house and land for what I'll pay in our new area. The "floor" pricing is much much different. And low cost housing doesn't scale well, imo. The disparity between 100K and 200K is much different than that of 400K and 800K.

 

I don't think the industry is ready to roll back to the old ways though. If anything I think these changes are meant to shift the analysis and risk back to the lenders, and I bet lenders will oblige, eventually.

[road2freedom]

It looks like there will be no limit reductions for now... but they still plan to make the decision and timeline in November.

 

http://finance.yahoo.com/news/fannie-freddie-finish-sorting-loan-193255910.html

Edited October 25, 2013 by road2freedom

[road2freedom]

This one says "at least 6 months" from the announcement http://www.bloomberg.com/news/2013-10-24/fannie-mae-loan-limits-to-remain-unchanged-at-beginning-of-2014.html?cmpid=yhoo

[road2freedom]

Good news - no limit changes for 2014!

 

http://finance.yahoo.com/news/fannie-freddie-loan-limits-hold-155320803.html

 

(spacing is terrible and I'm amused they referred to them as "irregulator" by mistake. )