What to make of the Mortgage Reform bill

The Mortgage Reform and Anti-Preditory Lending Act of 2007 (view) passed the House last week and I see good and bad there. If it ever becomes law it looks like stated income loans will go be the wayside which means it will be harder to get a mortgage for some people and more documentation will be required.

Also lenders that put borrowers that in lower rate ARMs so they can afford a higher loan amount will have to document that the borrower will be able to afford to make the payments after the rate adjustment. Overall this protects borrowers from disreputable mortgage brokers putting them into mortgages that are not in the customer's best interest - which is obviously a good thing.

The downside is that overall we would have fewer people that qualify for mortgages which means fewer home sales ultimately dropping home prices or at least slowing appreciation.

My feeling is if you don't qualify for the mortage you should probably look for a less expensive home instead of getting creative financing or keep renting until you can save more for your down payment. Kind of old fashioned, I know.