JSMedia – In the past two years, mortgage loans have been soaring, and the housing market is still shaky. That trend is about to end. In the meantime, the government is stepping in to provide more financing for home buyers. A new law, EPIC will help lenders to make more affordable mortgages. But it will also come with consequences for consumers and the mortgage industry. Here are some of the most important changes in the past two years.
First, the CFPB has proposed a streamlined loan modification process. This will allow homeowners to lower their monthly payments by lowering their interest rates. The proposed rules also will make it easier for servicers to approve loans with low or no fees. And the best news is that it is a start.
It will help borrowers in desperate need of financial relief. The CFPB has already given mortgage lenders six months of time to come up with solutions to prevent foreclosure.
An Epic Moment For Mortgage Lenders
The CFPB has proposed a streamlined loan modification process. This would allow homeowners to apply for a modification that decreases their monthly payments by more than five percent. In addition, it would allow mortgage servicers to offer partial loan modifications based on incomplete applications. However, borrowers must still provide the CFPB with proof of their income, recent bank statements, and tax returns. This will be a big help to those struggling with their mortgages.
The drop in interest rates last year made it easier for home buyers to refinance. This opened the door to the housing market during a period when many were waiting for the economy to rebound. And the drop in rates also freed up homeowners’ budgets. Some even bought second homes or investment properties. The bottom line is that these programs created a healthy environment for home sales, making the economy stronger and the housing market more resilient.
The federal interest rate dropped to practically zero almost one year ago, boosting the residential real estate market and spurring a tidal wave of refinancings. While this did not protect every sector of the economy, it did protect the housing market from another housing crash. Despite the fact that the federal government did not protect all sectors of the economy, the interest rate cut did a lot to boost the housing market.