By Gerald Morales

2014 may prove to be tougher for potential home buyers to secure a new home loan. New mortgage rules are set to take place next year by the Consumer Financial Protection Bureau, which will make lenders screen home loan applicants in greater detail.

Effective January 10, 2014, the new mortgage rules call for an in-depth analysis of all applicants that apply for a home loan. Next year, loans will require lenders to dedicate both more time, and resources towards individual home loan applications.

Why the change?

The regulations currently in place are what many believe caused the housing market crash at the end of 2008. The new rules are supposed to help prevent lenders from providing loans to people that are prone to face a foreclosure or short sale at some point in the future. In the bigger picture, the new rules are thought to prevent another housing market crash.

"By bringing back these basic building blocks of responsible lending and servicing the customer, we will improve conditions for consumers seeking to enter the market and for all those who are still struggling to pay down their existing loans." said Richard Cordray, director of the Consumer Financial Protection Bureau.

Overall, the new regulations aim to ensure lenders do everything in their power to protect the housing market. The new rules hold lenders more accountable for each loan they provide, and borrowers can feel more secure when they qualify for a loan.

The hopeful result is that less people who are not financially stable enough to afford a monthly mortgage payment will qualify for a home loan; therefore, banks won't lose as much money in the long run when borrowers cannot pay their debt.

Who will be affected?

Loans are going to take longer to process and evaluate, which could threaten small banks. Longer processing is going to make mortgage applications more costly, for both the banks and applicants. Smaller banks may not find it as worthwhile to dedicate resources towards qualifying borrowers. Next year, we could see a significant reduction in the amount of smaller banks that are willing to provide home loans.

Smaller banks are not the only ones at risk, borrowers may put off applying for a home loan for another year or two. With the cost of home loans increasing, and stricter regulations set to take place, there may be less people that feel financially confident enough to attempt to purchase a home. We may not see as many sales of homes in 2014 as we did in 2013, but only time will tell.

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