Question

"Investment Decisions- Mortgages" Please respond to the following:

• New regulatory requirement imposed on banks and financial institutions may have impacted a bank’s ability to generate mortgages for home buyers by increased requirements for disclosures, notices, statements, and documents related to lending. Evaluate the pros and cons of increased regulatory requirement, indicating the impact to the lender and the buyer. Provide support for your answer.
• Based on your review of the mortgage rate trends, predict the future (within a year) rate of the 30-year fixed and the 15-year fixed rate mortgage, indicating the basis and rationale of your prediction, and the resulting impact to the mortgage industry.
• Please provide one citation/reference for your initial posting that is not your textbook. Please do not use Investopedia or Wikipedia.

Answer 1

The new regulatory requirement imposed on bank and other financial institutions it's has become very difficult for the banking sectors and other financial institutions for lending of money to the investors.. as we can see in today's world the reforms are being changed so rapidly and all the banking sectors are being trapped in the vicious circles of these reforms so it becomes difficult to execute the mortgages for home buyers as there has been numerous other formalities and protocols being followed by increasing the number of documentation statements required by all the banker.

The pros of these regulatory requirement are that they tend to make things more systematically and organized making the rates of the bank being judge in a way that Jo one is having loss by making a deal through lending from mortgages.It makes useful for both the buyer as well as seller.. The seller appetite for investing increases by seeing such trends of mortgages pattern and this in return allows the seller to make most out of it.

The cons are as mentioned due to such constant reforms the buyers get hassled by numerous paper works and other information being changed so quickly they tend to kiss out important things and thus loose their trust on these financial institutions. For the seller these regulatory reforms have impacted in a much sense way where the investors are not being able to invest much due to its inability of generating mortgages at the time of urgent need for the buyer without certain formalities being fulfilled so they become helpless due to these regulatory reforms.

Based in my review the rate of 30 year fixed of mortgages will be 16% and 15 years fixed will be 7.8% by seeing its impact on mortgages industry