Boston Condos for Sale and Rent
Before searching for Boston condos for sale – check your credit report
Consumer complaints over credit reporting and loan originations jumped significantly during the past 18 months, as the COVID-19 pandemic hit and interest rates plummeted to historic low levels.
A lengthy report from the Consumer Financial Protection Bureau looked at the relationship between U.S. Census characteristics and the share of consumers who made official complaints about each stage of the credit lifecycle. It found that between February 2020, when the pandemic began, and July 2021, there was a substantial increase in the volume of consumers that made complaints around credit reporting and loan originations.
The CFPB said the loan origination complaints were mostly driven by grumbles over the mortgage application process. The number of complaints rose by 50% in 2020 compared to two years earlier, with the majority stemming from communities that were predominantly white and have higher incomes.
“Much of this volume appears to be related to refinancing of existing mortgages as consumers try to take advantage of historically low interest rates,” the CFPB said.
Added to that, complaints about credit reporting in 2020 rose from already elevated levels in the previous year, the report found.
“Because of its unique role in the credit lifecycle, downstream from past credit and upstream from new credit, the increase in consumers with credit reporting complaints may also bear some relationship to consumer’s attempts to improve credit scores as they seek new credit, especially given current mortgage interest rates,” the CFPB said.
That statement is backed up by the fact that consumer complaints around delinquent servicing fell below 2018 levels and stayed low throughout the entirety of 2020 and into 2021. The Bureau said this is probably a result of the Coronavirus Aid, Relief and Economic Security Act (CARES), which came into law in March 2020 and provided financial relief to struggling homeowners who have federally-backed mortgages.
The CFPB said data compiled between 2018 and 2020 shows there are demographic links to the types of complaints that are submitted to it. Communities with lower incomes that are predominantly Black and Hispanic had higher shares of complaints relating to past financial issues and identity theft victimization. Meanwhile, more affluent communities that are predominantly white filed more complaints around current issues they have with lenders and servicers, the Bureau said
The CFPB said its observations highlight “structural differences in access to credit”, which are depicted by relatively affluent white borrowers submitting complaints around loan originations at more than double the rate of Black borrowers, with the “differences in complaints about mortgage credit playing an outsized role.”
According to the CFPB, the stark differences in the type of complaints serve as yet another reminder of the “racial wealth divide in the United States and its relationship to credit access, especially around housing finance.”
It said the findings of the report show that past barriers limiting access to mainstream credit for racial minorities, the long-term impact of the 2008 mortgage crisis and continued inequality when it comes to credit access continue to determine the kinds of opportunities consumers have.
The CFPB also identified a pattern that it said was especially concerning: the growing wealth gap between more and less affluent communities.
“This increasing gap suggests that new credit, especially mortgages and mortgage refinances, may be disproportionately available to consumers from communities with higher median incomes and a greater share of white, non-Hispanic residents,” the CFPB said.
Boston Condos for Sale and Rent
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Before searching for Boston condos for sale – check your credit report
If you’re interested in figuring out what you can afford in the Boston condo for sale market, the first step is getting fully pre-approved for a loan. And part of that process involves a lender pulling your credit so it can verify the type of loan for which you’ll qualify
I’ve heard Beacon Hill prospective condos buyers question why it’s necessary to have a lender run their credit score as part of the loan process.
Lenders are interested in a borrower’s “depth.” For example, a lender wants to see that a buyer has used credit in the past 24 months, and believe that if the Charles River Park condo buyer doesn’t have debt, the credit score may be compromised. As a result, the lender may not be getting an accurate read on the borrower’s ability to pay.
Additionally, lenders want to make sure a buyer’s credit line still actually exists. I heard about a situation wherein a borrower who had past credit closed it all down. He had no active trade lines over the past 24 months, and his loan options became significantly limited. He had wanted a 30-year fixed, jumbo loan, but was unable to get it. As a result, the buyer had to go with an adjustable rate mortgage with a lender that was willing to overlook his lack of current credit.
I strongly recommend consulting with a lender or mortgage broker when you believe you may be getting serious about buying a Boston Seaport condo. They can alert you to these sorts of issues early on, so you can potentially rectify them and take advantage of the best loan and interest rate available.
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