CFPB Releases New Mortgage Rulings

The Consumer Financial Protection Bureau (CFPB) has recently issued new Mortgage rules. These rules cover a lot of territory, but the part of the 804 page document discussing changes to borrower affordability is generating the most attention.
The focus on affordability is due to the recent housing bubble – or the period of self-reinforcing increase in home prices. This led to poorly enforced rules that allowed lenders to award loans to individuals who were unable to afford them leading to a burst in early 2007.

In response to the real estate bust and credit crisis led to the Dodd-Frank bill passing into law in 2010 some see this law as a knee jerk response that ordered the CFPB to define “qualified mortgages” or mortgages that lenders can award with minimal risk and these rules are to go into effect on Jan 10 2014.

These new rules have declared that qualified loans can no longer include any of the following::
·      interest-only;
·      balloon payment;
·      negative amortization;
·      term exceeding 30 years;
·      zero documentation;
·    lender fees exceeding 3 percent of the loan amount (unless that amount is less than $100,000); or low "teaser" rate on an adjustable-rate mortgage (ARM)

There are few loans being issued today that include any of these listed loan options and these new rules should help alleviate some of the excessive stringency in the current market.

Moving Day Meals

We all know that moving day is a challenge with planning, logistics and the physical (and emotional) strain. Planning meals is one thing that may slip through the cracks.

Finding their way

Be sure to identify restaurants in the area. This is particularly helpful if you’re  moving across country. Useful apps like yelp.com and urban spoon can make this easy. While you’re at it, look up the address of a local grocery store.

Open first box

You’ll want to pack a “first opened” box. It does not get packed into a moving van and is the first one moved to the kitchen where it is easy to find. Inside will be the essentials: first aid kit, medications, toiletries, trash bags and the items necessary to make the first meal in your new home. Don’t forget that utensils and plates to serve the first meal should be added to this box.

Keep it simple

The first meal at a new home should be easy to make and served without a lot of hassle. One of the easiest things to make is pasta. Sauce in the jar doesn’t have to be refrigerated. Dry pasta is easy to transport and store. The best thing is that it can be made in one pan.

For lunch or for summer days, you might suggest making sandwiches or hoagies, which do require a quick trip to the grocery store.

Having the first meal in the new home is one of the best ways to transition to a new area. Having a planned meal, with all the essentials to make and serve it, will help to ease the stress.

Housing Market Rebound Stays Steady

Across the housing industry, the cautious consensus seems to be that the market rebound is steadily moving forward.

Market is 52% back to “normal”

Jed Kolko, Trulia’s Chief Economist, blogs on The Huffington Post.

This month Kolko posted about Trulia’s Housing Barometer, which looks at three indicators — construction starts, existing home sales and the delinquency-plus-foreclosure rate — and compares them to both their worst level and to their pre-bubble “normal” levels.

The December 2012 barometer indicated positive signs:

• Construction starts were at a 54-month high, the highest since June 2008 — putting construction starts 47% back to normal


• Existing home sales were down slightly — dropping about 1% from the previous month, existing home sales were still at their second-highest level since November 2009 and if distressed sales were left out, home sales were up 26% year-over-year in December


• Delinquency + foreclosure rate was steady — just barely down from the previous month, December’s rate of mortgages that were delinquent or in foreclosure is the lowest it’s been in four years, and 41% back to normal

Taken together, these three indicators show a market that is 52% back to normal — compared to just 27% back to normal in December 2011.

(Read Jed Kolko’s complete article on The Huffington Post, here)                

Home prices increase is the biggest in 6 1/2 years

According to CoreLogic, U.S. home prices rose 7.4% in November 2012 — the largest annual percent increase in six and a half years. Rising home prices are considered to be key to the housing market recovery. CoreLogic is forecasting home prices to continue to rise in 2013 by another six percent.

(via Investors.com)

Lead with your head

Even as many indicators — including data for housing starts and permits and the National Association of Home Builders/Wells Fargo Index of traffic of prospective buyers — show the housing market is recovering, experts recommend that home buyers and sellers make strategic rather than speculative decisions.

Robert Shiller, professor of economics and finance at Yale and one of the economists behind the S&P/Case-Shiller Home Price Index, wrote the following last week in The New York Times,

The bottom line for potential home buyers or sellers is probably this: Don’t do anything dramatic or difficult. There is too much uncertainty to justify any aggressive speculative moves right now. If you have personal reasons for getting into or out of the housing market, go ahead. Otherwise, don’t stay up worrying about home prices any more than you do about stock prices.

(Read Shiller’s full article on The New York Times, here)