New year, new mortgage rules
Earlier this month, a series of new mortgage laws kicked in, all with the intent to thwart chances of borrowers taking out more than they can afford.
The changes come as the housing market is showing signs of another boon, but regulators are trying to make sure we don't have a repeat of lenders giving mortgages to borrows unable to pay it back.
The Consumer Financial Protection Bureau new mortgage laws are described as more information and protection for borrowers.
It offers protection for the lender and borrower as long as it's what is described as a "qualified mortgage." That describes loans approved and issued only after the lender checks and verifies applicant's income, assets, debts, credit history and other financial information.
The rules have certain debt-to-income requirements, and qualified mortgages can't have features like negative amortization or no-interest periods.
"Taking out a mortgage to buy a home is one of the biggest decisions a consumer can make," Richard Cordray, the consumer bureau's director, said in a written statement. "We want to make sure that people are aware of their new protections so they have the knowledge to make sound decisions about their financial futures."
Some other rules:
Mortgage servicers must send a clear monthly statement so borrowers can see how their payments are credited.
Servicers must credit payments as of the day they receive them.
Servicers must provide early notice to borrowers with adjustable rate mortgage when their interest rates are about change. This is intended to give customer more time to shop for a new loan or get help with the new payment.
Servicers can't start the foreclosure process until at least 120 days after the borrower's last payment.
Servicers can no longer start a foreclosure while they are also working with a homeowner who has submitted a complete application for help.
Reach Tyrone Richardson at 937-5550 or twitter.com/tyrichardsonPC.