CFPB rule helps consumers avoid bad mortgages
Thursday, January 10, 2013
This “ability-to-pay” rule was prompted by irresponsible lending practices that played a significant role in the housing collapse that resulted in many families losing their homes.
Pamela Banks, senior policy counsel for Consumers Union, said, “We think the rule will help consumers avoid bad loans. While it’s good that the CFPB is going after some of the worst abuses in the mortgage market, we urge them to keep the pressure on to ensure all mortgages offered to consumers are fair and appropriate.”
Under the new rule, the CFPB said a lender must obtain and verify a consumer’s financial information, including employment status, income, assets, debts, and credit history; a borrower must have enough income or assets to repay the loan; and teaser rates can no longer hide the true cost of a mortgage.
A detailed summary of the ability-to-pay rule is available here.