Tougher mortgage loan regulations go into effect - NBC12 - WWBT - Richmond, VA News On Your Side

Tougher mortgage loan regulations go into effect

RICHMOND, VA (WWBT) -

New federal regulations go into effect Friday for people trying to get a loan on a house.

You may have a tougher time securing a mortgage and many mortgage lenders and brokers say it definitely means more paperwork.

Since the housing market crashed in 2008, regulations clenched down on the mortgage and loan industry.

"[In] 2008, a lot of transactions were not verifiable transactions, whether it be income, or assets. In some cases, even the appraisal…Those days are gone," said Mark Kittrell, co-founder of Liberty Mortgage Corporation in Richmond.

Since the marked crashed, buyers, brokers, lenders and banks have been made to prove that the borrower can pay.

"Literally, you're being scrutinized during the loan process to make sure you are who you say you are, your income is what you say it is, and the assets you have for closing are what you're representing them to be," continued Kittrell.

Many of the standards have already been in effect, or were acted on by lenders. Friday, it will be required to make sure everyone involved in a mortgage loan transaction is complying. 

"Most lenders were already preparing for it and we were doing that due diligence," said Lori Skeeter of the changes. Skeeter is a mortgage lender with Alcova, working in Richmond.

Skeeter says buyers will be further monitored, after the loan is approved

"Maybe you qualified for the loan at the time you came in and sat down and did the application. But since then, you've gone out and bought a whole bunch of new cars and things. We're going to look at those [scenarios]," added Skeeter.

Lenders and brokers say your chances of securing a loan are probably going to be the same as they were in the last couple years. However, they say be prepared for more paperwork, and a lot of it being redundant.

"If we have to endure additional paperwork, additional documentation, additional processing, in order to ensure the integrity of the market, than we need to do it," said Kittrell.

Lenders and brokers also have faced tougher standards in licensing and education, to ensure everyone in the mortgage industry is up-to-date and credible.

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