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The Consumer Financial Protection Bureau Announced New Mortgage Rules

In 2010 the government established the Consumer Financial Protection Bureau. It is this agency’s job to make sure that the consumer is protected as far as financial matters go. They have recently released a new list of mortgage rules that banks must now follow. According to the New York Times, this is to start next January. With these new rules the Consumer Financial Protection Bureau wants to enforce qualified mortgages. This is meant to ensure the borrower can actually afford the loan. It will also protect the lending institution should the borrower default on the loan. The new regulations say that the borrower must have an income and asset combination that is sufficient to pay back the loan. The goal with this is to make sure that before someone gets a loan that they are able to pay for it. If they are not able to pay back the loan, then the borrower will end up in over their head with debt, and no way to pay back the loan. This can really ruin the borrower’s credit score. Another rule is regulating how much the monthly payment can be. The Consumer Financial Protection Bureau is limiting the monthly payment to be no more than forty-three percent of the borrower pre-tax income. This will help the consumer not have such a high payment every month that they cannot afford the other necessities that they need to purchase, or pay other bills that need paid. Upfront fees are to be limited now. No longer can banks charge fee after fee after fee. Now they are limited on what they can charge for fees so that the consumer is not overwhelmed with paying for fees when getting a loan. The Consumer Financial Protection Bureau is also eliminating interest-only payments. These types of payments can leave borrowers in much more debt. When the borrower is only paying on the interest, not the loan itself, they are not paying off the loan at all. Instead all the money goes to the interest, which will just come back as more interest that needs paid. It is… Read More