Dodd Frank is Here and the Sky Hasn’t Fallen

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A couple of weeks into the new Dodd Frank mortgage era – and we almost didn’t even notice.  All the Chicken Little’s began to come outside see the sky was clearly not falling as they had predicted.  Dodd Frank has not made it more difficult  to qualify for a new Arizona mortgage.  The new Dodd Frank mortgage regulations went live on January 10, 2014.  The initial perception was that Dodd Frank mortgage regulations would create more obstacles.  Also that lenders would have to require lower debt-to-income ratios and require borrowers put 20% down.  This was not the case.  The mortgage regulations contained within Dodd Frank are comparable to mortgage regulations that have been around for years!

How did Dodd Frank Change the Mortgage World?

Although the new Dodd Frank regulations are similar to those already in place, some things have changed.  Primarily, instead of mortgage regs being just that, they are now backed by law – The Dodd Frank Act.   Consequently, consumers now have something to lean on in a court of law if they foreclose.   As a result, borrowers can argue if they feel that their mortgage lender put them into loan they could not afford.  Internally, Arizona mortgage lenders are performing additional compliance tests and in some cases making sure borrowers have sufficient residual income.

That’s about all we have seen change in the early dawn of the Dodd Frank era!   No new absurd loan denials or unreasonable new mortgage guidelines.  We have not seen underwriters grow fangs or carry pitchforks (well not new fangs and bigger pitchforks any way).  In summary, borrowers are jumping through the same hoops now as they were previously relating to qualifying for a new mortgage.  This is primarily due to the temporary “Qualified Mortgage Clause” contained within Dodd Frank.  Of course time will tell and as we all know the only thing that we can count on in the mortgage industry is change.

By Jeremy House

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