Impact of the New Mortgage Regulations on Our Society

In the year 2008, while Florida was affected by the unfortunate recession and economic distress, the country as a whole was no exception. The associated housing market crash caused difficulties for many Americans. According to Bloomberg in 2010, around 2.87 million home were subject to repossession, auction or defaulting.

However, the economic downturn is still continuing and people are still experiencing wage reduction, job loss and underemployment. At the same time cost of living is also becoming high and homeowners are not being able to manage their finances. Thus, crime levels are rising and mental health issues like depression are becoming a common problem. Hence, new regulations have been introduced keeping these points in mind.

As per the new mortgage regulations, people capable of making at least 20 percent down payments can only get lower-cost mortgage. New mortgage regulations also suggest that monthly mortgage repayment should not be more than one-third of your wages.

There are many people who have monthly mortgage payment more than half of their monthly income, and thus have very little room for emergencies, such as illness and accident. Thus, the new regulations of mortgage have been designed to check mortgage lenders from lending to individuals who have very little room to meet their financial obligations.

Although the new mortgage regulations have been designed with the purpose of wellbeing to the society, they have certain disadvantages as well. Under these new regulations, it will be difficult for a large number people to purchase a house. 20 percent down payment is a substantial amount for those just starting out in life. Similarly, people from lower socio-economic group will find it hard to amass the money necessary for purchasing a house.