Sunday, March 16, 2014

Reg Z - Impact in Boulder?

by Osman Parvez

On January 10, the new Qualified Mortgage Rule went into effect.   Created under Dodd-Frank, the rule tightened lending standards in exchange for increasing lender protection from liability.  In theory, this should allow easier securitizations - important as the Fed kills off its quantitative easing programs.

On the ground here in Boulder, overall sales volume dropped 13.7% since the rule went into effect (chart) but sales of $1MM+ properties has continued at the same pace as last year.  

From a Loan Engine Keeps Humming (WSJ):  

Many in the mortgage industry worried that the "qualified mortgage rule" would curb access to loans, including jumbos. But the regulation has created little stir, with lenders picking up the slack as others pull away from riskier types of loans.

It can be tough to read the tea leaves and analyze market conditions at this time of year.   Although sales volume has dropped, the biggest underlying factor is the unrelenting inventory shortage.  

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