Editor: David Reiss
Brooklyn Law School

December 12, 2013

Reiss on New Mortgage Rules

By David Reiss

The Redding Record Searchlight interviewed me in Experts Worry New Loan Standards, Lending Limits Could Hurt Housing Market. It reads in part,

New mortgage qualification rules and lower FHA lending limits that take effect next year threaten to slow the housing market’s recovery.

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David Reiss, a law professor at Brooklyn Law School in New York, said there is nothing wrong with tying the price of a loan to the risk.

“There is some talk that if it’s not a Qualified Mortgage loan, the cost for the creditor or lender will be higher and the cost will be passed on to the homeowner. That will probably be true,” Reiss said.

But Lawrence of Silverado Mortgage said just because one in five loans written today wouldn’t pass Qualifying Mortgage muster doesn’t necessarily suggest the loan would not be approved and closed under the new standards.

“Making a minor adjustment such as using a different interest rate and closing cost combination may allow a loan to meet the standard that it wouldn’t otherwise,” Lawrence said.

Lawrence knows there will be some loans for which an alternative can be found to resolve a Qualifying Mortgage issue.

“But I think most buyers start with getting pre-qualified before they find the home they’re interested in purchasing,” Lawrence said.

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