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On Friday, January 10, new Consumer Financial Protection Bureau (CFPB) rules will go into effect that will help protect homeowners and homebuyers from the mortgage abuses that led to the housing crisis. Specifically, consumers will get protections from lenders that make risky loans without checking a borrower’s income, assets, or ability to repay a loan.
The rules are part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, which was enacted after the mortgage market collapsed and millions of consumers lost their homes.
“The CFPB is getting results for consumers,” said OSPIRG’s Consumer and Taxpayer Advocate Celeste Meiffren-Swango. “These new rules are designed to help people safely buy affordable homes and keep them.”
Among the highlights of the CFPB’s new rules are the following:
• Consumers will get more information and more protection when shopping for a loan and during home ownership.
• Lenders will be required to make a “good faith, reasonable effort” to make sure you can repay your loan.
• Loan officers and brokers will now have to follow rules that protect consumers from conflicts of interest.
• Consumers will receive periodic mortgage statements that put important information about monthly payments in one place.
• Servicers must, under certain circumstances, reach out to borrowers having trouble making mortgage payments and help them apply for the options available to them to avoid foreclosure.
“In addition to the new rules protecting homebuyers and homeowners, the CFPB has released a variety of self-help tools so consumers can protect themselves,” added Meiffren-Swango. “With these new rules and tools, consumers will have a better chance to protect themselves against unfair practices in the mortgage marketplace, whether they are buying a new home or already living in it.”
The CFPB’s new tools will help consumers:
• File a mortgage complaint
• Find a housing counselor in their area
• Get answers to mortgage-related questions
• Read tips for homebuyers and homeowners
• Download a guide for housing counselors
The CFPB was established as a centerpiece of the 2010 Wall Street Reform and Consumer Protection Act. It is the first federal financial regulator with just one job: protecting consumers. It has jurisdiction over both banks and non-banks, so it protects consumers no matter where they shop. Among numerous other achievements, it has already ordered big credit card companies to refund nearly $800 million to consumers for unfair practices.
“Over five years ago, an unregulated mortgage marketplace led to tragic outcomes for millions of homeowners and the collapse of our economy,” Meiffren-Swango concluded. “We agree with the CFPB that homebuyers and homeowners need a marketplace with no debt traps, no surprises and no run-arounds. These rules and tools will help make that a reality for consumers.”
To read the CFPB’s new rules, go here: http://files.consumerfinance.gov/f/201312_cfpb_mortgagerules.pdf
To see the CFPB’s new tools for consumers, go here: http://www.consumerfinance.gov/mortgage/
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