Virginia Mortgage Markets To Get A Shake Up
Mortgages in Virginia may well become a little harder for those who are on the borderline for mortgage qualification. The Virginia Legislature is about to start considerations on several bills designed to restrict some of the freedoms that lenders have experienced in the past. While ‘robo signing’ has been discussed a lot in the press, it, along with the trading of mortgages, could soon be under the microscope.
How will this affect marginal borrowers? Robo signing affects every mortgage holder that is about to be foreclosed upon. The end of robo signing will force lenders to manually inspect and sign every document required to comply with foreclosures. This will certainly slow down the process and may give borrowers that extra time to make good on the mortgage arrears.
What will have a greater affect is any action that makes the trading of mortgages more difficult. In the past, the mortgages that have been traded the most are those that are considered to be high risk. If lenders cannot trade these high risk mortgages, the only option left is to reduce the risk – this will mean using tighter lending criteria for mortgage applications.
The long term affect will be felt by home owners who are trying to sell their homes. With fewer people qualifying for mortgages, especially at the lower end of the market, the lower the demand for housing stock. This could further depress prices at this end of the market – and over time across the whole market.
While mortgage holders need protection, so too do lenders. From a real estate point of view, home sellers also need some protection – especially from forces that reduce demand and home prices. If you are considering selling, and your home is in the lower end of the market, sooner may be better than later.
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