New Mortgage Lender Rules Meant To Help Also Hurt

--Homebuyers feel the squeeze, credit counselor predicts drop in home sales

Business Wire

posted: 39 DAYS 13 HOURS AGO

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When the Federal Reserve enacted new rules to protect homebuyers from unfair and deceptive practices on October 10, it also made it more difficult to qualify for mortgages.

With changes in the Federal Truth and Lending Act, “Lenders are examining buyers’ credit under a microscope,” says Bruce McClary of ClearPoint Credit Counseling Solutions, a national nonprofit organization that helps consumers overcome personal finance difficulties. “These more stringent lending standards combined with the expiration of the first-time homebuyer tax credit on November 30, will undoubtedly create even more obstacles for homebuyers resulting in a significant drop in home sales.”

McClary believes that homebuyers can address the situation best by maintaining a good credit score. He advises consumers to monitor their credit reports and if they spot any issues, no matter how minor, to work toward resolving them:

To address credit card debt, seek free credit counseling from a nonprofit agency. These organizations can often work out debt repayment plans to reduce interest rates, pay down debt and improve consumers’ credit standings.
When the $8,000 tax credit expires, homebuyers will need to direct more of their own money to buying a home. A healthy down payment shows ability to pay. Credit counselors can also help consumers budget monthly contributions toward that goal.
For those with issues on their credit reports, a credit counselor can strategize steps for clearing up inaccuracies, paying down debt and improving their credit scores.
HUD-approved housing counseling agencies, such as ClearPoint, offer free first-time homebuyer classes and counseling. By learning about the home buying process, real estate terms and how to shop for a mortgage, buyers can arm themselves with knowledge to prevent them from becoming victims of predatory lending.

“Although prices are low, buying a home is more challenging than it has been in a decade,” says McClary. “But, by arming themselves with information such as knowing their credit score and attending to it before they need it, homebuyers can qualify and take advantage of historically low interest rates.”

Editor’s Note:

Bruce McClary from ClearPoint is available for comment. Please call (877) 877-1995, extension 2730 or write Bruce.McClary@ClearPointCCS.org