Prospective homebuyers who seek a mortgage loan will soon start seeing new requirements when they visit a lender like WEI Mortgage Corporation. It’s all part of the new “ability-to-repay” rule, which was finalized in January of 2013.
This rule was written by the Consumer Financial Protection Bureau in response to the financial crisis of 2008. During the crisis, home values dropped and many homeowners found they owed more money on their mortgage than their house was worth. The resulting foreclosures created a chain reaction that rippled through the economy. The government’s goal with the ability-to-repay rule is to prevent similar circumstances in the future by making sure homebuyers don’t take out mortgages that are too large and risky.
For consumers, this means that when they visit a lender like WEI Mortgage Corporation, they will be asked to document their income and other assets that can be used to pay off the loan. This will include current income, employment status, credit history, and monthly payments on other obligations like property taxes. The lender will use this information to make sure the mortgage is prudent for everyone involved.