No More Bubbles!

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If you can recall the housing bubble that took place around 2007, many people went after the American dream. The house with the grandiose marble staircase and the luxurious swimming pool became possible to attain because lenders were allowing consumers to borrow the money that was necessary to obtain these gilded desires. However, many lenders neglected to make sure that an individual could afford to pay the money back. Consequently, homeowners that were initially qualified to receive those loans were left in a position where they could no longer afford to repay them. This caused a ripple effect throughout out the entire financial industry and led to the collapse of certain financial institutions.

Now that the market is somewhat recovered, congress is making lenders learn from their past mistakes by implementing the Dodd-Frank Wall Street Reform and Consumer Protection act. The Consumer Financial Protection Bureau issued these new guidelines to mortgage lenders with goals of bringing down foreclosures and preventing future housing bubbles from being created or expanded. The CFPB focused specifically on Regulation Z. This deals with the Truth in Lending Act which directly impacts a consumers ability to purchase a home.

The regulation prohibits lenders from creating a loan without considering the borrowers ability to repay and enforces parts of the Dodd-Frank Act. Regulation Z also prohibits lenders from penalizing borrowers who pay off their loans early and makes lenders retain information that they have been following through on the new guidelines for three years.

Now potential homeowners will receive honest feedback regarding their financial stability and the kind of home they will be able to afford with their loan. Lenders have to make a thorough assessment of a homebuyers' financial income, debt to income ratio and any assets that they may have to determine their ability to repay the loan. For more information about the Dodd-Frank regulations visit the Consumer Financial Protection Bureau website at www.consumerfinance.gov

Source: The Consumer Financial Protection Bureau

Unsure about how to navigate today's unpredictable real estate market? Let us help you make an informed decision and deal with any concerns you have about purchasing the home of your dreams.

Mynor and Associates

Keller Williams Capitol Properties

License 611201301-473-1622

For Sale by Agent/Broker