New mortgage rules intended to curb irresponsible lending could actually hurt South Florida’s housing recovery by making it harder for potential buyers to get a loan, the Herald Tribune reported.
The new rules, issued by the Consumer Financial Protection Bureau, ban lenders from making risky “interest-only” and “no documentation” loans, as well as using low interest “teaser” rates, starting in January 2014.
“The new rule is a positive development for borrowers and industry members because it will help ensure that borrowers have the ability to repay their loans, and provides a degree of regulatory certainty for lenders and the secondary market,” Kris Yamamoto, a senior vice president at Bank of America, said.
But others argue that the new strict lending rules will make it unnecessarily hard for borrowers to receive financing, in an already tight-fisted lending market.
“Lenders are very careful now. People who should get loans are getting loans, but it is a more difficult process for everyone,” David Hunihan, director of sales at homebuilder Neal Communities, said. “My fear is that the legislation is too far reaching, that people who should get loans won’t be able to, and that’s not good for anyone.” [Herald Tribune] —Christopher Cameron