Please take note of the charts below. Boston area is seeing a 3.8% price increase from October 2011. Important to remember that Boston home prices fell on average 10% versus California and Florida where prices dropped 40%.
As professionals in the housing market, we must be able to give expert advice to our clients in order to guarantee that they make the best decisions for themselves and their families.
When talking to potential purchasers, we must be able to intelligently discuss the changes that will be taking place in 2013 because of CFPB and QRM. These changes will have a major impact on the mortgage process and a buyer’s ability to finance their purchase of a home.
Consumer Finance Protection Bureau (CFPB)
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 created the CFPB. Its purpose is explained on their website:
“The central mission of the Consumer Financial Protection Bureau (CFPB) is to make markets for consumer financial products and services work for Americans — whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products.”
The site goes on to explain:
“Like a neighborhood cop on the beat, the CFPB supervises banks, credit unions, and other financial companies, and we will enforce Federal consumer financial laws.”
In 2013, the CFPB will put its stamp on the mortgage industry in the United States. We should keep ourselves aware of the changes that will be coming and their impact on the home purchase experience. One of these changes will be QRM.
Qualified Residential Mortgage (QRM)
The Consumer Financial Protection Bureau (CFPB) and other federal agencies are currently developing guidelines for loans that will have a statistically lower risk of default, based on the underwriting guidelines and product features built into the loan. A loans meeting these new guidelines will be a qualified residential mortgage.
What impact will this have on the mortgage market?
According to the Qualified Residential Mortgage Resource Center:
“The bottom line is that borrowers who fail to meet the basic criteria for a qualified residential mortgage will have a harder time finding a loan, when compared to borrowers who do meet those criteria. They might end up paying a higher interest rate, as well…Financial analysts from J.P. Morgan Securities have estimated that borrowers might pay up to three percentage points more for loans that are subject to risk-retention (i.e., loans that don’t meet the definition of a qualified residential mortgage).”
Home Sellers —- WE NEED YOU! Sellers now is the time! All the cards are stacked in your favor– low-interest rates, low inventory, many buyers, stable lending– it doesn’t get any better. There is only one condition–your property must be priced accordingly. The neighborhood, the street, the condition of the home, the competition are all factors in a successful sale, and they all must line up. This is not a time to be greedy but a time to be optimistic. The Spring market starts in late January or early February here in Newton. If you are considering selling your home this Spring, don’t wait any longer , call or e-mail me today so we can be sure your home is in top condition. I have the tools, the resources and the know how to help you achieve your goal for a successful home sale. I work with a variety of trades people to help you eliminate clutter, touch up paint, fix a few broken items, and most importantly a thorough cleaning to help your home sparkle. I also work closely with Laurie Nordman from Next Stage Associates if you just don’t know where to begin. Laurie and her team can handle any size job. Next Stage also does a superior job with Seniors, so if you or your parents are considering a move they are the exactly the people you should call. Margaret Szerlip firstname.lastname@example.org 617-921-6860