Proposed Fed Changes = Possible Nightmare for Boulder Real Estate

According to Certified Mortgage Planning Specialist, Nora Ziel, the proposed Federal Reserve Mortgage changes could prove to be a tremendous nightmare for Boulder real estate property owners and those thinking about buying or refinancing current loans if a low-doc or no-doc loan is in their plans.

Ziel goes on to say that there have been many changes to the mortgage industry as a result of the mortgage crisis of the past year. Colorado has been leading the way and Congress has followed much of Colorado’s lead. Although the new Colorado laws are more restrictive than some of the national laws, most of what Colorado has done falls under the category of requiring smart lending practices – regardless of what loans the markets will purchase.

However, there is a proposal in front of the Federal Reserve that would significantly change the nature of mortgage lending and in her opinion, significantly worsen the housing crisis with Boulder leading the way. The proposal would require all mortgage loans to be income qualifying. Borrowers would have to prove their income in every case. Sounds innocent enough, doesn’t it? In Boulder, 30% of the mortgages done are Stated Income loans. These loans are designed for credit worthy people that are self employed or have non-traditional incomes. With these loans, good credit and a larger down payment, borrowers state their income and it must only be reasonable for the job. For example, a self employed house cleaner, stating that they make $15,000/month wouldn’t be considered reasonable, unless they owned a company full of employees. This affects the self employed, small business owners since many self employed people write off a great deal of their income to reduce their tax burden according to Ziel.

So what does this mean in Boulder? We could see upwards of 30% of our current homeowners being unable to qualify for the mortgage they currently have and are paying on time. These people won’t be able to refinance to get equity out of their homes, to purchase new homes or to refinance when their ARMs adjust. With 2,000,000 ARMs due to adjust before September and 23,000,000 ARMs still outstanding, this could be dramatic.

Currently 30 year fixed interest rates are about 5.75%. If you have an ARM, or are a stated income borrower, you ought to look closely at refinancing before the Federal Reserve takes action in March. Generally there is no grace period when the Fed takes action, so if this applies to you, don’t wait.

If you’re ready to take action before the proposed changes take hold or just want more info, call Nora Ziel at 303-527-1175 or email her at


2 Responses to “Proposed Fed Changes = Possible Nightmare for Boulder Real Estate”

  1. Bob on January 10th, 2008 7:00 pm

    You seem to know Ziel pretty well and she has some good things to say. would you recommend her if we need a lender in Boulder?

  2. Zachary Epps on January 10th, 2008 7:04 pm

    I would recommend Nora Ziel without hesitation. She’s served many of my clients well and the feedback on her professionalism is great.

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