Mortgage rules starting August 1, 2015

[easyrider Senior Member Find all posts View Profile Close easyrider]

A result of the Dodd Frank act, the Consumer Financial Protection Bureau was created. This agency will be in charge of oversight on bank lending and will create costs passed on to the consumer. Banks will need to comply and this compliance will result in documentation of every penny used to qualify for a loan. Starting August 1, 2015 there will be extra paperwork and documentation to get a loan which should actually slow mortgage lending down resulting in a housing slow down.

This documentation includes explaining where you obtained the funds for your down payment. Transfers from IRA's will be scrutinized. Cash sales from sales of vehicles or toys will be disallowed until seasoned in a bank account for 90 days.

http://www.consumerfinance.gov/mortg...s-at-a-glance/

[chriskre Super Moderator Find all posts View Profile Close chriskre]

Documentation of every penny will lead to lots of creative writing.

[rapmarks Moderator Find all posts View Profile Close rapmarks]

my daughter bought a year ago last January. this is exactly what happened when she bought. they looked at a checking account she and i have together and checked on the source of every deposit. they examined everything she had. and they sure violated my privacy because they wanted to see the source of anything I deposited. they wanted to see my income tax returns and i wasn't even on the contract. they wanted to see the source of the check I had written for Christmas.

[easyrider Senior Member Find all posts View Profile Close easyrider]

We have , for the last 30 years anyway, have been self employed. This is now a problem when applying for a mortgage loan even with 50% equity because of the new rules.

Like rapmarks, we did use joint accounts with our kids to help them save up some funds to purchase a home. Last year my son was denied a loan on a foreclosure because he couldn't document exactly where all of the income came from that would be used to purchase this home. He had 70% to put down, a good credit score and a good debt to income ratio. Some of his income was from selling a vehicle and boat for cash.

Starting this August, I bet it gets worse in regards to mortgage lending and better in regards to credit card lending.

[rapmarks Moderator Find all posts View Profile Close rapmarks]

also, I did gift her something and the bank said the check had to sit for 30 days before the funds would be released.

[mdurette Senior Member Find all posts View Profile Close mdurette]

It appears this is all going to get pushed to October 1st.

If I may, as a mortgage loan officer for over 20 years....I certainly realize that it isn't fun to document a mortgage application, especially funds to close. It is probably the most difficult part of the job. Just keep in mind, for the most part, it is not the lender that makes up some of the ridiculous things we ask for. We have guidelines that are set like the ones you see in the link. We are just the enforcer of the guidelines (well we are if want to keep on lending).

Deposits are sourced to ensure that people didn't take a cash advance on a credit card or another loan...thus creating more debt than we know about.
Self employed....yep, we will use your bottom line profit after all your expenses.
Income from W2 jobs....two years history is a pretty good rule to follow.

gone are the days when a high FICO, millions in the bank and loads of equity will get you a loan. Quite simply....no stable monthly income, no mortgage.

Rapmarks: Some of what you wrote above is a bit above and beyond typical mortgage documentation. My guess is that the funds in that joint checking were being counted somehow for the transaction, thus the reason for the sourcing. The sit for 30 days....my guess is they probably couldn't document the deposits the way they needed and decided to trash those statements with deposits and wait until a fresh statement was available that didn't have deposits that could not be traced.

[rapmarks Moderator Find all posts View Profile Close rapmarks]

no and no, some bills had been paid from the joint checking, but none of it was being used for the mortgage, and the check was a gift and the bank would not release it. had to reverse it and have my broker wire funds directly.