Low-Income Will Find it More Difficult to Get Mortgages in the Future

The new qualified mortgage rules will change the number of people who can get a mortgage.

Now that the “qualified mortgage” rules have been put into writing and the debt ratio of 43% is going to be common place going forward, many will not be able to qualify for a mortgage.

So, what do these families do? Rent forever? Find higher paying jobs, that don’t exist? We have a nearly 8% unemployment rate and a much higher rate if you include those that are under-employed, what do these families do?

Once interest rates start moving upward, less and less potential homeowners will be able to qualify for a mortgage and their American dream is gone.

When there are less folks coming into the market place to buy homes, what happens to real estate values?

More Low-Income, Minority Credit Shortages Ahead

By: Amilda Dymi

"In recent years data have shown the legacy of the housing crisis was disproportionately negative on low-income and minority homeowners. New findings indicate another crisis in the making for these buyers."

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Lisa Beth January 25, 2013 at 03:57 PM
I worked in a New London law office during the 'boom' right through the 'crash' and we did 5-6 closings a week. In the beginning, they were on the up and up but as time went past my ex-boss and I found ourselves saying "What is this?" time and again. We saw some of the frutiest stuff you'd never want to see in your life come through the office. Including one couple on a fixed income buying their first house. The mortgage alone was $100.00 MORE than their monthly income and the bank knew it! When we tried to warn them about this they casually looked at us and said: "The bank said that's fine." Needless to say within a few months they were in foreclosure. This bank outright took advantage of them and who knows how many other people. Why? Because they knew they could flip the house for a faster tidier profit than simply collecting the mortgage money every month. Near the end of the crisis the banks got stuck with the houses they foreclosed on. Case in point; my neighbor who lived in his home for 50 years. He wanted to get a loan to make small improvements to his modest home and was told by Countrywide Home Loans that the "least" they could possibly lend him was $110,000.00 and he fell for it. Again, he was on a fixed income and Countrywide knew he'd have trouble paying it back but he believed them. The banks played a lot people for suckers and got away with more than they should have for longer than they should have.
Gregory Johnson January 25, 2013 at 04:03 PM
Frontline just did an episode on this. It made the DoJ's Lanny Breuer resign. Here is the link to watch it: http://www.pbs.org/wgbh/pages/frontline/untouchables/ It's quite clear what happened, AMAZING FRAUD...and no one went to jail. So tell me why I should trust corporations (and by extremely close association, our government)?
Maria Giannuzzi January 25, 2013 at 05:50 PM
The experiences of the homeowners you describe in your comment, LB, were repeated all over this country. The bankers and mortgage brokers were sophisticated, knowledgeable individuals, who even under the spell of irrational exhuberance, knew what they were doing. A German bank, Deutsche Bank ended up with a lot of those foreclosed homes and huge losses on their books. They got into the mortgage loan merry-go-round late in the game, just before the bubble burst. I believe they and other foreign banks were bailed out by the U.S. government.
Maria Giannuzzi January 25, 2013 at 05:52 PM
I think the head of Countrywide was prosecuted, but I believe all he paid was a fine, a very small percentage of what he reaped in compensation and bonuses.
Maria Giannuzzi January 25, 2013 at 05:56 PM
My hunch is that a lot of the bankers and mortgage brokers told many homeowners that their mortgage could be refinanced in the future, so that the payments would be more affordable. But some of those loans were junk, right from the beginning. If you do not have enough income to cover a car payment along with your other expenses, you don't get the car loan.


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