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What should we expect with new lending laws this year?

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POSTED January 17, 2014 7:58 p.m.

Hey Real Estate Boys; It’s a pleasure to be able to ask for your guidance.  I have heard there are a lot of changes coming in 2014 as to lending.  Can you Boys help me understand what changes are here now that we’re in January?   Also, let’s hope the 49ers beat the Seahawks and are heading to another Bowl appearance.  GO ‘9ERS.

— Just Joe

Well Just Joe, I’d have to ring up a few lenders to get an answer to your question. The Niners  vs. the Seahawks is about to start so, here’s what my lending friend, Ed Walters from Primary Residential Mortgage, Inc. , had to say.

Here comes 2014 and those of us in real estate are “one crazy breed of people” who keep making lemonade from a huge pile of lemons.  We believe in a United States of America that can pull through even the worst of times, and we believe in ourselves. 

There are additional regulations coming, so from a lending point of view we need to know some of these major issues that will face homebuyers, Realtors, lenders, appraisers, title companies and more.

Here are a few:

1)The Federal Reserve and Dodd-Frank bill that has caused far-reaching reforms in many areas will continue to do so.

•Appraisers will continue to be held under tight scrutiny and the selection process will continue in the same fashion.

•Another GFE (good faith estimate) will roll out for lenders and title companies to use (might be better than the mess we currently have now).

— More “crossing over” from other governmental oversight like the Bank Secrecy Act, the Patriot Act, FinCen, ECOA and Identity Theft requires more in-depth investigation of all parties involved in a real estate transaction. 

2)HUD has announced the decrease in loan limits that will take effect Jan. 1, 2014, such as:

•Merced County from the high of $412,500 down to $322,000.

•San Joaquin County from the high of $423,750 down to $304,750.

•Lastly, Stanislaus County from the high of $423,750 down to $276,000 — OUCH!!

3)“QUALIFIED MORTGAGES” or QM & “ABILITY TO REPAY” or ATR (Jan. 10)

— Qualified Mortgages will now be required to stay below 43 percent debt ratio with more stringent guidelines on the way.

•Lenders and Loan Officers are now more personally responsible at keeping home buyers in SAFE HARBOR with severe penalties and the right for the consumer to take legal action. 

• Limitation on fees that will affect lenders’ ability to perform on many loans.

•More documentation will be called for and more forms proving ability will be used.

Much of this is not yet “set in stone” so you can bet more will come our way. 

Well, now that I have “hung a lot of Crepe” where in the world is the good news?  Well, we made it when FHA loan limits were $108,000; we made it when rates were 18 percent; we made it when previous declines in the economy took place; we made it after 9/11 and those reading this have made it after the Great Recession that just occurred.

Also, we still live in a wonderful country; we have the ability to pursue our dreams; we have an improving economy; we still gave enough tools to make a great living; we have wonderful human beings with whom we can assist in getting their homes and we love our work.

Ed can be reached on his cell at 209-968-6132.

Ed, thank you so much for allowing us to just copy what you see as big changes for 2014.  Now the Boys will try and interpret a few of the items we feel our readers may not understand.  FinCen is a governmental bureau under the Department of the Treasury and they collect and analyze information about financial transactions in order to combat money laundering and other financial crimes.  Wow, that is a mouth full.

To put this all in perspective,  this is the same federal government that says we want equality in the world as to the haves and have nots by putting more laws in effect making it more difficult for the lower income buyer to qualify for a home loan.  We just checked on the MLS and it shows out of 104 current listings in Turlock only 18 homes and five condos are in the FHA loan limits.  And can you believe the Feds are going to hold a mortgage broker personally responsible for the loans they make?

In closing, your Real Estate Boys don’t have any problems following rules and regulations, but maybe the Feds should be more consistent with enforcement.  In the late 1990s the Feds said “we have too much money sitting in banks. It’s time to relax the regulation on making loans.”  Then there was the run on money from every non-qualified borrower lying to the lender that they could make those payments.  As you know the ATM machine ran dry in 2005 and 2006, then we had the banks and stock market collapse.  After five to seven years in this Great Recession we are looking like we may be coming out of this mess.  How do we fix the past? Regulate it.  We’ll see what 2014 brings us folks.  As we said last week, 2014 could and should be a great year for the Valley.  Keep your fingers crossed.   And Joe, pray for rain.  We understand that rain brings dark and cloudy skies. But Joe, in this case dark and cloudy skys could boost our future. 

  — Lloyd was a farmer for 27 years and is well versed in ag and homes. Lloyd has been a Realtor since 2000. He is active in the Realtor CanTree project and was a Board member with the Central Valley Association of Realtors. He was honored by his peers as the 2006 Realtor of the Year.

Larry became a Realtor in 1983 and a broker in 1987. He was appointed to the Turlock Planning Commission and then elected to the Turlock City Council. He is a past President of the Central Valley Association of Realtors. Larry has also donated over 13 gallons of blood to the Delta Blood Bank!

Lloyd and Larry have ventured out and opened their own real estate office, Turlock Realty Group, located at 1505 Geer Rd., Turlock. They are located directly behind String’s at the Geer and Hawkeye intersection.

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