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New Mortgage Rules Issued by Consumer Financial Protection Bureau

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The U.S. Consumer Financial Protection Bureau (“CFPB”) has issued “Ability to Repay” rules designed to make mortgages more affordable for homeowners. Key features of the new guidelines include the following:

  • Potential borrowers have to supply financial information, and lenders must verify it;
  • To qualify for a particular loan, a consumer has to have sufficient assets or income to pay back the loan; and
  • Lenders will have to determine the consumer’s ability to repay both the principal and the interest over the long term − not just during an introductory period when the rate may be lower.

In addition to the Ability-to-Repay rule, the CFPB also issued a proposal for potential adjustments. There are two key parts to the proposal:

  • First, a proposed exemption for designated non-profit creditors and homeownership stabilization programs, as well as certain Fannie Mae, Freddie Mac, and Federal agency refinancing programs. These programs generally appear to be already subject to their own specialized underwriting criteria, and they are designed to help consumers refinance into a more affordable home loan.
  • Second, a proposed a new category for certain loans made and held in portfolio by small creditors, such as small community banks and credit unions, called “Qualified Mortgages.”

The new rules prohibit a creditor from making a higher-priced mortgage loan without regard to the consumer’s ability to repay the loan.

The final rule implements sections 1411 and 1412 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), which generally require creditors to make a reasonable, good faith determination of a consumer’s ability to repay any consumer credit transaction secured by a dwelling (excluding an open-end credit plan, timeshare plan, reverse mortgage, or temporary loan).

The rule also implements section 1414 of the Dodd-Frank Act, which limits prepayment penalties. Creditors must retain evidence of compliance with the rule for three years after a covered loan is consummated.

Fort Lauderdale Foreclosure Defense Attorney

Choosing the best approach to protecting yourself and your family from a mortgage foreclosure involves many legal considerations. Contact Fort Lauderdale mortgage foreclosure attorney Marcy Resnik to discuss how you can defend your legal rights in a foreclosure. You can contact Ms. Resnik online or call her at 954-321-0176.