Further Ripples into A Paper from Subprime Fallout
Didn't think the fallout and credit tightening as a result of the subprime debacle would affect you? Think again.
The new Fannie Mae underwriting guidelines for all interest-only programs now must qualify the borrower on the full principal & interest payment. Previously the underwriting approval was based on qualifying for the interest-only payment.
Take the newly graduated, strong credit professional that will have a rapidly rising income stream from their new job. Where they once could get an interest-only loan that was properly matched to their financial outlook and purchase a home they can truly qualify for they now will have to settle for less.
In addition, Minnesota's new mortgage origination laws that go into effect August 1st reduce competition and sources of financing for strong credit, self-employed borrowers. This reduces potential buyers in the housing market and that ripples across all neighborhoods. The result is that if you decide to sell your home it will take longer to sell and you will have to settle for a lower sales price.
What a great law.
The law is meant to benefit only the largest of banks as they are exempt from the new laws. Can you guess who lobbied the hardest and gave the most money to the lawmakers? Follow the money.
I guess the state is saying that we should only trust the largest of companies. In my experience, the largest companies are the ones that do everything they can to milk every single red cent they can from their prospects and customers. Think Enron.
These are challenging times indeed and the worst is not yet in our rear-view mirror.
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