Cleveland Real Estate News

First the basics: The Feds are tightening or clarify some of the lending rules and they have decided the new laws will apply to all lenders, not just those who participated in the sub prime side of lending.

1. Verification of (in writing) a buyers ability to repay the loan when it is at it’s highest expected monthly rate. There used to be stated income or ‘no doc’ loans for people like restaurant workers who, well, don’t report all of their tip money for tax purposes, to use an example. My suggestion would be to develop a long term strategy if you are one of these workers.  First, for a period of time (say two years) report all your tip income.  And secondly, save up money for a down payment so you don’t have to be a zero down purchaser.  And of course keep your credit score above 600 (or get it there).  Then when all this has happened, contact a reputable mortgage lender and start discussing loans. 

2. Banning pre-payment penalties on loans that are not fixed and not allowing penalties to cover any more than a two year period.  I had a client who wanted to move into a much smaller home because of a change in the number of people who lived there (down to one from four) and because the loan on the current house had a very high prepayment penalty clause, this was not possible.

3. Lenders cannot (or real estate agents) coerce an appraiser into stating the value of a home that is not verifiable or correct. (How they are going to police this one I have no idea but it should have been a ‘rule’ before now, no?)

4. This next change used to only apply if you were obtaining a primary loan on a home: Creditors must provide a good faith estimate of the loan costs, including a schedule of payments, within three days after a consumer applies for any mortgage loan, including home improvement loans or refinances. So now, if you are refinancing your house, this ‘good faith estimate’ rule applies, or if you are trying to obtain a home equity loan. 

You can read about all the mortgage lender rule changes in CNN/Money  or  The Washington Post  articles today.

I just got a call from our Cleveland City Office mortgage lender, Bob Wilson, who passed on an FHA change that takes place as of today. Currently, if you have a conventional loan with a private mortgage (non-government) lender, and you fall behind on your payments, your mortgage insurance monthly payments go up.  Now this rule will also apply to those with FHA loans.  Peace Out - 3C

update: Elaine Reese, whom I referenced above, did a post today on green rooftops that is worth a read. Apparently Mayrsville Ohio is the home of Scott’s (the lawn guys!) and they showed why sod can grow on concrete.  (Her blog is currently linked in the comments but I don’t know how often that changes so wanted to provide it here).  Good stuff!

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