Have you heard the news that banks are going to get new rules and regulations on mortgage loans? It all comes from the housing bubble that went pop. For those that don’t know, that means when all the people that could not afford to make house payments bought houses, quit paying and the market went into the toilet.
Now, the same government that forced the loans for those that couldn’t pay is now going to make banks take steps to ensure that they don’t loan money to them that can pay it back. What a novel idea. Isn’t this what banks used to do?
Under the new rules, a person or person cannot borrow more than 43% of their gross income to buy a house. That’s almost half. When they pay income tax, social security tax and in some states, state tax, there’s not going to be a lot left for groceries.
Apparently it is true that Americans are financially illiterate. Therefore the new rules will have to spell out in words that a child can understand, exactly what contract terms mean. I wonder if that means that you can sign your mortgage in crayon?
Pick the one with the sharpest point.
PMO
©2013
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