And in an entirely separate move, President Obama’s Consumer Finance Protection Bureau (CFPB) recently introduced new regulations to “help protect you from lenders who might try to sell you an irresponsible mortgage that you can’t afford.”
The rental assistance announced this week supports the Obama Administration’s long-term strategy to prevent and end homelessness, said the announcement from the Departments of Housing and Urban Development (HUD) and Health and Human Services (HHS).
Many of the people who will get help with their rent might otherwise “be institutionalized or living on our streets,” said HUD Secretary Shaun Donovan. “We’re helping states reduce health care costs, improving quality of life for persons with disabilities, and ending homelessness as we know it.”
“Our nation is strongest when all our citizens are able to fully participate and contribute,” said HHS Secretary Kathleen Sebelius. “This unique collaboration of federal and state agencies will enable thousands of Americans with disabilities to lead productive, meaningful lives in their communities.”
The largest share of the money, $12 million even, is going to housing agencies in Texas and North Carolina. Agencies in California and Illinois will get close to $12 million; and Maryland gets almost $11 million. Lesser amounts are going to house agencies in Louisiana, Delaware, Pennsylvania, Minnesota, Montana, Georgia, and Washington State.
The federal funding is made possible through the Section 811 Project Rental Assistance Demonstration Program, which enables persons with disabilities who earn less than 30 percent of median income to live in what the government calls “integrated mainstream settings.”
The new mortgage-lending regulations – called the Ability-to-Pay rule – say lenders must ensure that a borrower can pay back the loan, plus interest, over the long term -- just the way things used to be.
“These rules will help protect you from lenders who might try to sell you an irresponsible mortgage that you can’t afford,” CFPB said. (The agency notes that in the run-up to the financial crisis, "we had a housing market that was reckless about lending money.")
As of Jan. 10, 2013 CFPB says lenders must verify the following before they can issue you a loan:
-- Current income or assets;
-- Current employment status;
-- Credit history;
-- The monthly payment for the mortgage;
-- The monthly payments on any other loans associated with the property;
-- The monthly payment for other mortgage related obligations (such as property taxes);
-- Other debt obligations; and
-- The monthly debt-to-income ratio or residual income the borrower would be taking on with the mortgage. (Debt-to-income ratio is a consumer’s total monthly debt divided by their total monthly gross income).