California home sales weaken because prices are higher than most potential buyers can qualify to borrow, a problem that will worsen if mortgage rates rise. Borrowers face real limits on mortgage debts thanks to Dodd-Frank. Prior to Dodd-Frank lenders would extend credit without regard to a borrower's ability to repay because lenders could sell these loans to eager investors willing to accept the repayment risk. The ability-to-repay rules mandate that lenders must document a borrower's income and demonstrate the borrower has the ability to repay on a fully-amortized repayment schedule; thus Dodd-Frank eliminated liar loans and Option ARMs, two toxic loan products that destabilized the housing market. Without toxic affordability products, the four fundamentals of housing market pricing, borrower income,…[READ MORE]