With the New Year Comes New Federal Laws Protecting Home Owners
Just after 2014 barely arrived, with it a number of new federal rules in the mortgage and foreclosure context did too. The Dodd-Frank Wall Street Reform and Consumer Protection Act are responsible for the changes taking effect. The Dodd-Frank Act provided authority to the Consumer Financial Protection Bureau to issue rules to implement the changes. Take a look at this sampling of the many changes:
Dual Tracking is Done
Mortgage lenders and services have been practicing dual tracking a lot in recent years. Dual tracking is where a bank considers a homeowner’s application for a loan modification while simultaneously going through with a foreclosure on their home. Federal law now prohibits this.
ATR (ability to pay) are standards that a loan applicant must meet to show their ability to repay a loan. Through much of the 2000s, loans were being granted left and right without numbers being run to see if applicants could actually afford them. Mortgage rates would often increase or balloon payments came to low rate loans after a few years inevitably causing home owners to default on their loan and lose their home through foreclosure. As of January 10, The CFPB has implemented rules requiring mortgage lenders to adhere to ATR requirements.
New Protections For High Cost Mortgages
Protection is provided to borrowers of loans with high interest rates or fees. The Dodd-Frank Act expanded these protections set by the Home Ownership and Equity Protection Act. For details, see here.
Other Requirements for Mortgage Servicers
The CFPB put a whole bunch more rules into action protecting mortgage holders, those shopping for mortgages, and those staring at the face of foreclosure. The rules require mortgage servicers to do the following:
-provide monthly billing statements to borrowers
-notify borrowers of adjustable rate loans when the interest rate changes
-credit mortgage payments promptly
-provide alternatives to force placed insurance
-quickly resolve mistakes and quickly respond to requests of borrowers, and
-contact borrowers who fall behind in their payments.
Guest Blog post by Edmonds Criminal Attorney Ryder Law Office.