Tuesday, October 30, 2012

Perfect Strom to Also Hit Mortgages in January 2013

Mortgage Lenders See Tighter Credit Under New U.S. Rules - Bloomberg News Headline

Regulation of the financial sector is a big issue in the current election.  The Democrats led by President Obama have successfully past massive reforms on lending effecting everything from credit cards to mortgages.  The regulations being spun out of these bills have already effected the ability of consumers to borrow.  New regulations expected to take effect on January 1 may interrupt the fledgeling housing recover, and thus the overall recovery.  Is this round of additional restrictions necessary?  Or do the Republicans, led by Governor Romney, have it right when the complain that these regulations on mortgage lending are too much and way too soon?

The Forbes article specifically point to two new regulations:
Regulators are preparing to release the language of two rules taking effect in January to set standards for non-abusive lending and require banks to hold a slice of risky mortgages on their books. In addition, U.S. banking overseers must also complete new capital standards mandated in the international Basel III accords next year.
The housing rules, coming almost simultaneously, may overlap or conflict, creating what National Association of Realtors President Maurice “Moe” Veissi called a “perfect storm” of regulation.
“There’s this intersection of policies that are absolutely not being considered by this massive array of institutions, all involved in deciding the future of homeownership and rental opportunity,” David Stevens, president of the Mortgage Bankers Association, said in an Oct. 22 speech at the association’s annual conference in Chicago.
 One might also ask, even if these regs are good public policy, would it be smarter to hold off on their implementation until the business and housing climate improves?

For consumers considering a new home mortgage or home refinance, this might be one more reason act quickly, especially if their credit score, down payment, and income place them on the cusp of eligibility. 

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