Hurdles in Today’s Home Mortgage Environment

What do you expect to experience when applying for a home mortgage today?

Quick turn-around? Less documentation requirements? Less paperwork? Not exactly. Due to the mortgage disaster of 2008-2009 and speculation from many Wall Street firms and some of the large multi-national banks, government regulation was implemented (Dodd-Frank Act) and has completely taken over the mortgage process (with the good intentions of protecting consumers).  Many community banks and other mortgage companies are exiting the mortgage market due to the high compliance costs and government over-regulation.  This, unfortunately, cuts access to mortgage loans and is not helping our consumers, our communities nor our national economy. Despite this and although the regulations may seem a bit overwhelming, we will walk you through the process to make obtaining a home mortgage as stress-free as possible by making you aware of some of these new laws.

What laws have been implemented so far from the Dodd-Frank Act and other government regulation?

  1. ATR-QM Standards (Ability to Repay Standards & Qualified Mortgage Standards)
  2. TRID (Truth in Lending Act and Real Estate Settlement Procedures Act Integrated Disclosures)
  3. New Flood Insurance Guidelines
  4. New Appraisal Standards and Guidelines
  5. New HMDA Guidelines (Home Mortgage Disclosure Act) - Soon to be implemented
  6. And “More to Come”

What do all these regulations mean to you?

More stringent and “must fit the box” underwriting standards leave many consumers no option for mortgage credit. More required information than ever before to be submitted, which is very time consuming and if you are self-employed, or have multiple entities, is over-bearing.  More complicated disclosures to be executed which adds significant paperwork and significantly more days/weeks to the mortgage process.  More personal data being collected and monitored by the federal government, which may seem to be overkill and intrusive.  Banks, mortgage firms, title companies, mortgage investors and realtors are still sifting through all of the requirements to assess a more streamlined solution.  However, each of these institutions interpret the regulations differently and can cause additional delays in closing mortgage loans.

What is your answer?

Until there is some common sense legislation to reduce the regulatory burden, we must understand and accept the increased time, paperwork, disclosure and scrutiny of the mortgage loan process. Another consideration is the expected timeframes for approval and closing. FirstCapital Bank has made the decision to stay in the mortgage business and our experienced mortgage lenders welcome your call to inquire and discuss the process and information requirements needed to apply.

There are efforts being made to “swing back the pendulum” of the regulatory over-burden to a more realistic level to better benefit consumers. As we work to overcome these hurdles, any communication consumers can have with their federal and state legislators to request realistic regulatory relief is a step in the right direction.