Dive Brief:
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Starting this week, it could be easier for new homebuyers to qualify for mortgages.
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New guidelines took effect on Monday that clarify when the federal government will penalize banks for lending to underqualified loan applicants and then selling those mortgages to Fannie Mae and Freddie Mac. Those penalties have cost lenders billions of dollars in the past.
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The rules had led banks to become ultra-strict about credit requirements for mortgages, pushing homeownership out of reach for many.
Dive Insight:
The guidelines are expected to ease credit restrictions and qualify at least 1.2 million additional homeowners a year for mortgages. Many of them will be young, first-time buyers, who have been largely absent from the housing market since the recession—a reality that, in turn, has slowed the economic recovery. And easier loans could lure investors, who have been backing away from the housing market, back to the settlement table.
Still, there’s no guarantee these young adults and investors will be rushing to the bank to apply for loans any time soon. Yahoo Finance columnist Michael Santoli said: "Home ownership lust is gone for now. It’s a generational thing. That doesn’t mean there aren’t good deals, but it doesn’t mean we are going to see this upsurge of interest I think in home speculation."