New Mortgage Rules for 2014
published on 05/09/2014
By Kenneth Wohl, VP, RCB Bank Mortgage
On January 10th 2014, the Consumer Financial Protection Bureau (CFPB) put into effect new mortgage rules. These new rules have forced lenders to do a more thorough screening of the applicant’s repayment capabilities, which in turn requires lenders to devote more time and resources toward loan applications. Here are some things you should be aware of as you begin your home-buying process.
Who is the CFPB?
CFPB was established when Congress passed The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) to protect consumers by carrying out federal consumer financial laws. Among other things, the CFPB:
- Writes rules, supervises companies, and enforces federal consumer protection laws
- Restricts unfair, deceptive, or abusive acts or practices
- Takes consumer complaints
- Promotes financial education
- Researches consumer behavior
- Monitors financial markets for new risks to consumers
- Enforces laws that outlaw discrimination and other unfair treatment in consumer finance
Why the change?
Previous mortgage regulations (prior to 1/10/2014) are believed by many to be what caused the housing crash of 2008, which helped feed a slowing economy and cause a recession in the U.S. These new rules should help protect the housing market in the future by preventing lenders’ financing options for customers who are considered more likely for a future foreclosure or short sale. The new rules also are designed to hold lenders more accountable for the loans they originate and help keep the market stabilized.
Who is affected by the new rules?
With lenders required to look more intensely at each loan application, there is a possibility of processing times being extended, closing dates being delayed, more so than the real estate industry has become accustomed to.
Also, due to regulations set forth by the CFPB, borrowers may see an increase in closing fees, as the cost of doing loans increase. And specific fees, costs (in the form of APR’s) and debt ratios set by CFPB, may affect borrowers with lower credit scores and/or higher debt ratios meet the new qualification requirements.
Overall, these new rules should help protect our economy and consumers that otherwise might get taken advantage of by a predatory lender. We might all be affected in some way, but financially sound borrowers will most likely still fit within the new regulations and be able to obtain their new home.
I encourage you to visit www.consumerfinance.gov and learn more about CFPB’s new rules that may affect you when begin your home-buying process.
I’m happy to answer any questions you might have about mortgages, even if you are not an RCB Bank customer. You can reach me by phone at 405-608-5291, or email at firstname.lastname@example.org.
Opinions expressed above are the personal opinions of Kenneth Wohl, and meant for generic illustration purposes only. For specific questions regarding your personal lending needs, please call us at 855-BANK-RCB. Member FDIC and Equal Housing Lender. RCB Bank NMLS #798151.