Regulators Move To Enforce Debt Limits On Homebuyers

In an effort to prevent a second foreclosure crisis, federal regulators are proposing a new round of rules that will restrict the mortgage options for homebuyers with large amounts of debt. Most people don’t know much about debt, smart solutions are important, I recommend to read debt advice – what is an IVA?

The proposal not only affects borrowers whose total debt — including credit cards, automobile loans and student loans — is more than 36 percent of gross monthly income. It also would affect borrowers whose mortgage payment alone is more than 28 percent of their gross monthly income. These programs are not just for new teachers. If you meet the listed Stafford or Perkins loan criteria, and taught in one of the eligible schools, you should really check defaulted student loans info. The list that the U.S. Teacher Cancellation Low Income folks keep goes back to 1998, and as long as you fill out the form, and have the Chief Administrative Officer of the district you worked for sign it, you may get some repayment help.

Nearly three out of every five U.S. borrowers who bought homes last year would not have met the proposed restriction on total debt, according to an analysis by mortgage research firm CoreLogic.

Both consumer advocates and mortgage industry experts are upset about the proposed measures saying that it could not only negatively impact the housing industry; but it runs the risk of pushing the dream of homeownership further out of reach for Americans with moderate to low-incomes.

There’s no doubt that the proposed debt limits could force homebuyers to either purchase smaller homes or force them out of the home buying market completely. However, eve more worrisome is the risk that such limits could further damage a housing market already full with unsold inventory. By severely restricting the debt load of buyers taking out a mortgage, we shrink the opportunity of current homeowner to sell their properties at prices which will pay off their mortgage.  Also, the proposed debt restrictions could have the domino effect of forcing some sellers into foreclosure when they are unable to sell their properties even after a year or more.

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