What is interesting is that they aren’t covered by the non-traditional mortgage guidance yet (*I THINK*), but they clearly know it is going to be regulated. The other thing is that the guidance CLEARLY states that the person must be qualified at the fully indexed rate, yet here they are trying to qualify at fully indexed rate minus one percent.
“Tightening underwriting guidelines for its adjustable-rate mortgage programs for at-risk borrowers. This includes using the fully-indexed
rate minus 1 percent as the qualifying rate for these borrowers.”
They also appear to be clamping down a bit on stated income loans:
“Enhancing its processes for confirming the income information provided on stated income loans.”
I’ve talked with several realtors about these lending guidelines, and none of them knew anything about it. I was surprised that they are so poorly informed about something that could potentially bring real estate transactions to a screeching halt. The spouse of a lender had not even heard of the guidelines, one realtor didn’t know that the lender is now required to verify income via IRS tax records (she said that stated income will still go no, but that’s not true), and the other had heard nothing about it. I thought the NAR keeps their realtors informed, but I think all they do is collect dues and sell forms.
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