CLEVELAND, Ohio -- Nearly 18 months after it became more difficult to qualify for a mortgage, nearly 80 percent of banks say that lending has tightened, and about 19 percent say the impact is "severe."
The American Bankers Association, which conducted a survey about mortgages approved last year, also said the new mortgage rules have hurt the housing market recovery. "Combine that with new mortgage disclosures, which are just around the corner, and we'll continue to see a slow down in what should be the ideal time to buy a home," said Robert Davis, ABA executive vice president.
Cleveland-area banks say the biggest impact on consumers is that borrowers must submit more documentation. Lenders overall said mortgages under the new law cost more, and require bigger down payments and better credit scores.
The Consumer Financial Protection Bureau adopted the rules for "qualified mortgages" in January 2014. The new rules don't absolutely prohibit home loans that aren't "qualified," but say the lender could face penalties and liability if it makes a non-qualified loan and the borrower defaults. Further, the same penalties will affect any company that buys or touches the loan. So a lender is unlikely to originate a non-qualified loan unless it plans to hold on to the loan and not sell it.
About 90 percent of the typical bank's mortgage loans made last year were "qualified mortgages," the ABA said.
The most common reasons for being rejected for a mortgage, according to the ABA, are borrowers with high debts compared to income and the lack of having required documentation.
The ABA also said that, despite ridiculously low 10- and 15-year interest rates, more people took out 30-year loans in 2014 compared with 2013. Half of all loans last year were 30-year loans.
One-third of banks said the impact on business has been "extremely negative." About 54 percent said the effect on business has been moderate.
read more: http://www.cleveland.com/business/index.ssf/2015/06/80_percent_of_banks_say_credit.html
No comments:
Post a Comment