Will It Be Easier to Get a Mortgage in 2014 and beyond?

Here are the factors that will impact future lending decisions:

• Beginning this year, lenders will be prohibited from extending mortgages to borrowers who cannot afford it under the Consumer Financial Protection Bureau’s new ability-to-pay rules.

• Credit scores of less than 640 will fall under the category of “subprime.” Banks making subprime loans would have less legal protection so they presumably won’t make such loans in the future.

• Banks would have less legal protection to make loans that do not have a minimum down payment of 10%, which is the minimum requirement under the qualified residential mortgage (QRM) rule.

• Borrowers’ debt cannot exceed 43% of their gross income

• Banks have been forced to repurchase many poorly underwritten loans that were sold to the GSEs (government-sponsored enterprises or GSEs, Fannie Mae and Freddie Mac, and loans backed by the Federal Housing Administration) and private investors during the boom days. Fannie and Freddie have been particularly aggressive in their repurchase claims. These new rules aimed to create more responsible lending practices could eliminate more buyers from the market and then half of the mortgage-origination market in the long run.