Chicago Relocation

Dodd-Frank and Mortgages in 2014

May 5, 2014

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John D’Ambrogio

While Dodd-Frank may be a bit of a dry subject, it’s still important!

The latest Dodd-Frank mortgage regs have seemed to cause a bit of a stir in the industry. And to add to that, the Consumer Finance Protection Bureau has adopted rules which prohibit lenders from making large loans without regard to the consumer’s ability to pay it back.  Lenders reacted by becoming even more cautious. So what gives and how does it affect relocating transferees to Chicagoland?

“The new mortgage rules are a serious challenge, especially in the near term, for mortgage lending,” according to Robert Davis, EVP of the ABA. “The problem will last at least as long as bankers calibrate their compliance systems, and perhaps much longer.”

The American Bankers Association’s (ABA) release the of its most recent Real Estate Lending Survey, shows signs of a little anxiety among lenders. Four out of five surveyed believe Dodd-Frank rules will restrict credit, decreasing the number of candidates able to secure mortgages.

The report shows 95 percent of those who say they will offer non-QMs plan to hold the loan as an investment. Only five per cent plan to sell the loan to secondary market investors.

But it was not all doom and gloom. First time homebuyer mortgages were up for the first time in seven years. And the traditional 30 year fixed was the mortgage choice for a full half on mortgages. The verdict? Those with a good job and good credit (and transferees with employer support) are in great shape. And the over the counter crowd still has some conservative hurdles to address. Not surprising….