New Mortgage Lending Rules Lower Risk of Defaults and Foreclosures

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posted 1/10/2014 in Realtor News

As of Friday, January 10th, the Consumer Financial Protection Bureau issued new rules that are designed to take a "back to basics" approach to mortgage lending and lower the risk of defaults and foreclosures among borrowers.

As a leading Mortgage Lender, Northwest Bank has implemented these rules through our lending process. These changes are applied to our back-end processing so our customers can expect to continue to receive impeccable service throughout their entire loan experience. We are committed to helping make our customers dreams come true!

The following are some highlights of this change:

  • Ability to Repay: Northwest Bank will determine if borrower has the income and assets to afford to make payments throughout the life of the loan. To do so, we will analyze the debt-to-income ratio, which is how much you owe divided by how much you earn per month, including the highest mortgage payments you would be required to make under the terms of the loan. The debt-to-income ratio generally must be below 43%. Northwest Bank’s calculators can help determine this qualifying amount.
  • Qualified Mortgages: Loans can still be made to people with debt-to-income ratios that are greater than that if other factors, such as a high level of assets, justify the risk. Qualified mortgages cannot include risky features, such as terms longer than 30 years, interest-only payments or minimum payments that don't keep up with interest so your mortgage balance grows. Upfront fees and charges cannot add up to more than 3% of the mortgage balance. That includes title insurance, origination fees and points paid to lower mortgage interest rates. In most circumstances, there's no minimum down payment or credit score requirement.

By servicing our loans in-house, loan decisions are made right here at Northwest Bank allowing for a quicker turn-around-time. This means customers work with us from start to finish and we guide them through the home loan process every step of the way. We take pride in having a quick response and a thorough follow-up. It’s important to us that our customer’s banking needs are always being met.