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good or bad news?

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good or bad news?

Message 1 of 8
7 REPLIES 7
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Established Member

Re: good or bad news?

@martypav7. Woah! That would be major if it happens, IMO.
Message 2 of 8
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Established Contributor

Re: good or bad news?

FAKE if  you ask me.

 

For a couple reasons:

 

1. The CFPB doesn't lend a nickel to any consumers.

 

2. It's already pretty easy to obtain a mortgage loan.  Ok, I know someone with a DTI > 43% will disagree--especially if their DTI is > 56.99% and they don't qualify for VA or FHA which are the only remaining outlets for folks with DTI > 43% but that's where one fails to realize the risk of lending money to someone that can't afford to borrow and pay back any more money than they've already borrowed or they are shopping for a home in a neighborhood they can't afford just yet.

 

Debates?

....

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Licensed NC Mortgage Loan Originator
Message 3 of 8
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Regular Contributor

Re: good or bad news?

This would be a terrible idea for the reasons that it states in the article.

 

Not to mention that the CFPB doesn't actually lend any money so their backing dosen't mean much. I can't see lenders removing overlays that are deisgned to secure them from mortgage losses.

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Message 4 of 8
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Established Member

Re: good or bad news?

I think this is good news.

 

In my case, my student loan balance is $205800 (all money well spent, I have no regrets) and in order to get an FHA loan, the loan is requiring 1% or $2058 be put into my DTI.  I am definitely not buying more house than I can afford.  Even with the 1% requirement, my DTI is 52%.   So while completely eliminating the DTI rule might not be necessary, changes need to be made. 

 

I mean ... at the end of the day if you don't pay your mortgage you end up losing your house and no one aspires towards that. At the same time, I don't think it's wise to deny Americans an opportunity to own a home over an arbitrary number . Maybe the DTI ratios can be relaxed for single vs joint/married applicants?  #shrug I don't know ... but I think something needs to change.

 

Just my humble two cents.

Message 5 of 8
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Established Contributor

Re: good or bad news?

Another 200k plus student loan borrower with basically no other debt... I think it would make more sense to change the attribution of student loan payments than to raise DTI limits. I maxed them out because of fake SL payments and that’s very different from someone who really has that payment burden. I wouldn’t feel comfortable with a larger payment than I have now and when you consider that the bulk of my DTI other than the mortgage is fake, that’s pretty crazy. People are really pushing what they can afford.
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Message 6 of 8
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Frequent Contributor

Re: good or bad news?

Seems like this would just create a 2008 issue all over again. I get that there's people who have excessive college loan debt, but seems like doing away with DTI ratio would just magnify any financial issues even more.

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Message 7 of 8
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Moderator Emeritus

Re: good or bad news?

Hrm.

 

I think it should be an even playing field for everyone in the market: if the GSE's get an advantage even more than they do, that ain't right.  Arguably we should be trying to unwind their influence and impact on the market but greedy government.

 

That said, DTI is absolutely a useful metric.  It's not lost on me that this rule would help me personally, I have a second income that goes somewhat through peaks and valleys depending on how many hours I bill and it's going to be awkward to claim so I hope I don't have to do it, but on the other hand it's also a lot of income that lenders would count and if DTI wasn't such a hard and fast thing it'd be zero issue and it would free me up to be a little less stringent on what I bought vs. not.

 

Couldn't get crazy, but getting a pre-approval at a 50% DTI line is a different animal than a 43% DTI line when chasing anything that has HOA's because those can be highly variable and I think everyone is aware they change over time anyway =/.

 

Don't know, I get why they want to remove it but I think I'd argue split the difference and relax it: either move it to whatever the QM_PATCH line is or just duplicate the FHA standards based on borrower's credit score and call it a day.  Seems like everyone gets what they want in that world: more fair market, and not with the loopy stupid stuff we saw in 2008.

 




        
Message 8 of 8
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