We will continue to support policies consistent with the goal of assuring that, taking into account all relevant circumstances, borrowers, who have demonstrated the financial capacity to meet their mortgage obligations, continue to have access to mortgage loans made by responsible lenders.
NAR supports requiring lenders to make subprime loans that have a reasonable debt-to-income ratio. Borrowers should have enough residual income after making their monthly mortgage payment, including property taxes and insurance, to meet their needs for food, utilities, clothing, transportation, work-related expenses, and other essentials. Similar to the escrow requirement exceptions for prime loans that exist in some jurisdictions, borrowers who make at least a 20 percent downpayment should have the option to budget for these payments independently.
The main exception should be for borrowers whose incomes derive from hard-to-verify sources (such as self- employed borrowers). Borrowers with large assets but low income who, for cash management or other financial planning reasons, elect a mortgage with a monthly payment that their current income is not sufficient to cover. NAR supports an anti-mortgage-flipping rule requiring mortgage originators making or arranging a refinance loan to verify that the new loan provides a significant benefit to the borrower. The lender should consider the circumstances of the borrower, as discussed above, as weli as all terms of the new loan including taxes, insurance, fees and other costs of refinancing, prepayment penalties, and the new interest rate, compared to those of the refinanced loan. NAR opposes prepayment penalties for all mortgages. Prepayment penalties often trap borrowers in loans they cannot afford by making it too expensive to refinance. If complete prohibition of prepayment penalties is not feasible, NAR supports permitting prepayment penalties for the shortest time and the lowest amount possible. Alternative Factors for Measuring Creditworthiness. Borrowers with little or no credit history, as traditionally measured, usually have lower credit scores and must pay more every month for their mortgage than those with higher scores. We urge HUD, the regulators, the GSEs, and lenders to work to strengthen these efforts. Use of alternative credit histories will be especially beneficial for low- and moderate-income first-time homebuyers and borrowers with problematic loans that need to refinance their mortgage to avoid foreclosure. It remains the responsibility of borrowers to decide upon the best mortgage for their needs and circumstances, but they can only do so if they understand all the facts so they can make an informed decision.
Doing so will allow the borrower an opportunity to shop elsewhere or receive counseling before proceeding.
For example, a prime borrower that applies for a loan to a lender that only makes subprime loans should be advised Delaware installment loans no credit check that other, more affordable options may be available. NAR supports enactment of strong remedies and penalties for abusive acts by mortgage originators. Responsible Lending Principles Should AddIv to Wall Street NAR appreciates that Wall Street investors, facing the implosion of numerous subprime lenders, a surge in foreclosure filings and record delinquency rates, are now requiring better underwriting and increasing pricing for subprime loans.
NAR urges secondary market participants to use our 8 Key Responsible Lending Principles as guidance during the course of due diligence in the acquisition of whole loans or loan pools. We believe that effective due diligence policies applied prior to the loan purchase would curb the ability of abusive lenders to pawn problematic loans off on the secondary market. The pressure is often subtle with an appraiser being asked whether or not they can provide an appraisal to match a general price. Consumer Disclosure: NAR recommends that lenders be required to inform a borrower of the methods used to value a property to determine the amount of the mortgage loan, and borrowers have the right to receive a copy of each value estimate or value opinion. Furthermore, lenders should be required to obtain a detailed site visit appraisal for properties financed with nontraditional mortgage products. Penalties for Improper Appraisal Influence: Congress should consider civil penalties against those who would coerce, intimidate or otherwise influence the appraisal process to meet a targeted value. Parties with an interest in the outcome of an appraisal should be limited to requests that the appraiser, (1) consider additional, appropriate property information, (2) provide fiirther detail, substantiation, or explanation for the value conclusion and (3) correct errors in the appraisal report.
Assist States to Improve Delaware installment loans no credit check Regulation of the Appraisal Industry: While the appraisal industry is regulated at the state level, the Appraisal Subcommittee sets appraisal qualifications and standards for federally related transactions. Thus, state regulatory agencies both license appraisers and certify appraisers for federally related transactions, NAR opposes expanding the authority of the Appraisal Subcommittee to issue binding regulations on states. However, NAR would support providing greater assistance to states for the purpose of strengthening regulatory and enforcement activities. Support Enhanced Education and Qualifications for Appraisers: The Appraisal Subcommittee, through its standards and qualifications authority, should recognize appraisers who have obtained special designations or training fi-om professional appraisal organizations that are sponsors or affiliate sponsors of the Appraisal Foundation. NAR believes that these four principles will help strengthen the appraisal process and ensure appraisal independence, These measures will provide the consumer added certitude that the appraised value of their purchase truly is a fair and accurate valuation. Foreclosure Avoidance and Mitigation NAR supports legislative, regulatory, and private-sector foreclosure avoidance and mitigation efforts. We urge lenders, especially lenders that have made loans without considering the ability of the borrower to make payments under the loan, to act promptly to help borrowers resolve the Delaware installment loans no credit check problem. Possible steps could include recasting the mortgage, forbearance, favorable refinancing, waiving of prepayment penalties, and other appropriate tools.