Affordable Financial Services Says New HUD Regulations for Mortgages Will Hurt Smaller Lenders

Tuesday, December 17, 2013

(Huntington, NY) —Brian Leibowitz, CEO/Owner, Affordable Financial Services, says the new rules from the U.S. Department of Housing and Urban Development regarding mortgages will negatively impact the mortgage lending business. He says the rules — which will take effect on January 10, 2014 — will place an unnecessary burden on these financial institutions, especially on the small- and mid-size mortgage lenders when approving a prospective homebuyer for a loan.

The U.S. Department of Housing and Urban Development recently released its final ruling on the definition of “Qualified Mortgage,” which includes new requirements for mortgages, starting January 10, 2014. HUD will require loans to feature periodic payments without risky features; have terms that do not exceed 30 years; limit upfront points and fees to no more than 3% of the mortgage value; and be insured by the Fair Housing Administration or HUD.

In addition, the mortgage lenders will be charged with making sure that the borrower will have the ability to repay the loan. Under the new HUD rules, the lenders must inspect the potential buyer’s financial statements before they can approve the loan and they have to make sure the borrower’s debt does not exceed 43% of their gross income. (The debt also includes the amount of the mortgage the borrower wishes to take out.)

“These rules that HUD will put in place next year will be too burdensome not only for the borrower but for the mortgage providers as well,” Mr. Leibowitz says. “The borrower’s obligation to pay back the loan now falls on the lender, which can be problematic for us. If that person forgets to make a payment, we will be on the hot seat.”

Mr. Leibowitz also says that the rules could affect the mortgage companies’ underwriting policies. “This means all of our employees will have to play catch-up in order to fall in line with the new rules while they fall behind on their work,” he says. “This will result in our servicers filing fewer applications, thanks to this newly established bureaucracy.”

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About Affordable Financial Services

Affordable Financial Services is a mortgage broker located in Long Island, New York, that provides loan process, refinance, home purchase, debt consolidation, and home equity loan services. The company provides clients with the knowledge they need to make the right decisions to move forward with the loan process. With its highly knowledgeable and professional mortgage consultants and processing department, Affordable Financial Services gives clients the best loans to fit their needs. As an industry leader, the company takes pride in its vast knowledge of the mortgage industry and the products it offers to borrowers. For more information, visit