Mortgage Law: Standardized Qualifications

In today’s industry, the qualifications for obtaining a mortgage loan are set by organizations such as Fannie Mae, the Federal Housing Administration (FHA), and other national entities. In addition, key laws (such as the Dodd-Frank Act) have been passed which define specific underwriting criteria for mortgage lenders. Therefore, nearly all lenders will have the same requirements when underwriting your mortgage loans.

How does this affect you? Since the options available and required documentation will be standardized industry-wide, the best lenders will therefore educate clients and gather all documentation up front. This includes:

• Income and identification paperwork
• Appraisal requirements (which are also set nationally now)
• Third-party verifications (such as calling your employer)
• Required federal waiting timelines after certain changes in your loan (such as changing programs)

This standardization when underwriting mortgage loans means all consumers can expect similar – if not the exact same – requirements with each entity for obtaining a mortgage loan.

Although this imposes more restrictions on consumers at times, the standardization also helps to compare companies. Some key traits to consider when deciding if a lender is right for you:

• Ability to underwrite in-house and obtain documentation in advance. This could mean closing your loan in 2 weeks vs. 2 months.
• Customer service ratings on websites such as Lending Tree and the Better Business Bureau.
• The attentiveness and skill of your mortgage loan professional – do they take 15-20 minutes to learn your individual needs, or simply offer their companies standard options?

Be on the lookout for future blogs about mortgage law and how it affects you.