Posted in Finances

Regulation Nation—are they helping you or hurting you? Yes, I mean you, the consumer – By Steven Ciantro

Steven Ciantro is a certified credit counselor, a management representative of American Debt Enders, and a former finalist in Inc. magazine and Ernst and Young’s Entrepreneur of the Year contest. He is also a Talk-Show Radio Host and successful published songwriter and musician (his album January Tyme can be heard on YouTube), the inventor of a patented medical device, a public speaker on debt issues, and the official debt expert for motivational speaker Gail Kasper’s Top 1% Club.



OK, 2014, and your life keeps getting more complicated as a consumer. The director of the Consumer Financial Protection Board announced a new set of rules affecting every consumer’s ability to qualify for a mortgage.
Yes, before giving you a mortgage to purchase that new home that at least was the American Dream (I’m not so sure anymore), the bank must literally peek into the future and gauge the likelihood that circumstances may arise in your financial life that cause you to default on it. This is called the “ability to repay rule.”

Here is how it works: Lenders must determine that a borrower has the income and assets to afford to make payments throughout the life of the loan. To do so, the lender may look at your debt-to-income ratio, which is how much you owe divided by how much you earn per month, including the highest mortgage payments you would be required to make under the terms of the loan.


So, how do you calculate your debt-to-income ratio? Simply add up all your monthly obligations—that would be the car loan, student loan obligations, credit card bills, etc. Then divide that number by your monthly gross income.


Now, to qualify for a mortgage, borrowers must have a debt-to-income ratio that is below 43%. It is just as I have always said: debt is not your friend. The new rules also prevent a practice known as steering, or pushing a loan candidate into a higher-interest instrument that they really cannot afford, which is one of the practices that helped contribute to the housing bust of 2008. In my opinion, this rule is excellent because when interest rates on your mortgage start creeping up, it can prove disastrous. This is the point at which many consumers start using credit cards to supplement their income.


Here is an interesting bottom line. You would think that these rules would gum up the works of mortgage lending and slow things down. Absolutely not; if you are looking for a mortgage, read on. There is no minimum rule for credit scoring when looking for a home loan. Well, not technically. Most lenders will find you a mortgage as long as your credit score is at least 620 (which was once considered a high-risk loan). Oh, yeah, and if they cannot prove that you will not default according to the new regulations, well, not to worry, since most banks have higher-risk pools with higher interest rates that they can place you in. You figure it out. And if you do, feel free to comment.



ABOUT STEVEN CIANTRO: Steven, a Certified Credit Counselor, Management Representative of American Debt Enders, is a former finalist in Inc Magazine, Ernst and Young’s Entrepreneur of the Year Contest in 1991. He is also a successful published songwriter and musician, album “January Tyme” can be heard on You Tube, Inventor of a Patented Medical device, Public Speaker (about debt issues). Steven is well suited to advising on debt issues, growing up with humble beginnings he personally made a fortune from nothing in his earlier years, and lost it. The experience completely altered his value system. It seems every professional debt expert we spoke to wanted to put us into even more debt to help us. It took years for Steven and his wife to untangle the financial mess, which they ultimately did on their own, gaining a tremendous education in the process. However, the experience left Steven with chronic kidney disease which he still battles today. In 2004 Steven found work at a national non -profit credit counseling company. After six months he became Regional Manager, Steven had found a new calling. He is in the unique position of not only having become a true expert on debt relief issues, but also understands how oppressive debt can be. In 2006 American Debt Enders was started as a company that would not only offer Free Credit Counseling, but also was among the first companies in the nation to use a unique business model of offering multiple debt relief programs and solutions under the same roof. Please contact 877-766-2465 for additional information.


This article is courtesy of the Top 1% Club and the Top 1% Club Mentor Gail Kasper. For additional information on Gail Kasper, her television appearances and speaking engagements, please visit