For years leading up to the mortgage meltdown, the U.S. government encouraged citizens to buy homes. Under the watch of the Obama administration, those days are long gone.

In the wake of the financial crisis, which was partially spurred by the burst of the nation’s housing bubble, the government is modifying its real estate policies to make sure only qualified buyers purchase homes.

Dodd-Frank Act Toughens Mortgage Rules

The Dodd-Frank Wall Street Reform and Consumer Protection Act, which was signed into law this week by President Obama, added some rules to the mortgage-lending industry.

Lenders must now do more thorough background checks before issuing loans. Lawmakers added this provision to keep risky loans out of the mortgage market. Subprime loans to under-qualified homebuyers pushed the housing market into a hole and contributed to the financial crisis.

At the same time, the Dodd-Frank act made life a bit easier for tenants of rental units. The renter-friendly portion of the act made it legal for tenants of foreclosed-upon property owners to stay in their homes for an additional 90 days to allow them to secure new housing.

Winding Down Homebuyer Programs

The government is now looking at ways to eventually get rid of government programs that encourage home ownership over renting. The government is expected to offer a proposal that would restructure or get rid of Fannie and Freddie Mac, the government-backed mortgage companies.

While the Clinton and Bush presidencies both encouraged home ownership, the occurrences of the past several years have shown the potential downsides of owning a home.

These changes might make it tougher to get a mortgage in the short-term. If you are on the edge of creditworthiness, don’t be surprised if a mortgage lender or two turns you down. Families that are in the process of taking maternity leave for a new baby are having trouble securing home loans. On the bright side, the government could be protecting you from taking out a mortgage that you might not be able to repay because of the conditions of the economy.