New HUD Rule / More Eligible for Mortgages? Maybe Not!
WASHINGTON – Sept. 16, 2013 – Federal housing authorities want to make it easier for people who lost their homes due to bankruptcy or foreclosure as a result of the economic downturn five years ago to qualify for a new mortgage – sooner rather than later. The Department of Housing and Urban Development(HUD) last month changed its rule requiring a 3 year waiting period for people who have lost their home due to foreclosure or bankruptcy, opening the door for them to buy another home in only one year as long as they have fixed whatever financial problem caused them to lose the previous home.
This is an effort to help boost the housing industry, which is a major part of jump-starting the economy.” “Three years can be a long time for a family to wait for a loan, and putting money into a rental instead of an investment can result in a loss,” said Don Frommeyer, president of the National Association of Mortgage Brokers in Plano, Texas. At a time when interest rates are ticking up and new mortgage applications are on the decline, the rule change could make more people eligible for mortgage loans, even if their credit was ruined during the Great Recession. But the Achilles’ heel of the rule change is that banks and other mortgage lenders are not required to abide by it.
What does this all mean for you? Well probably not much because banks are still very reluctant to stray far away from their current standards. Most lenders currently have more stringent requirements than HUD does anyway. Banks are now a little too overly cautious and scrutinize every details of a consumers credit and history. All because they, banks, were more worried with the value of collateral rather than the creditworthiness of the borrower. Contact your local REALTOR today for assistance in finding a great lender to help with a mortgage or refinance today.