Premiere Mortgage Services Inc. - Dana Bain

CFPB Rules Take Effect on January 10, 2014

November 6th, 2013 2:08 PM by Dana Bain

CFPB Rules Take Effect on January 10, 2014

New rules from the Consumer Financial Protection Bureau (CFPB) that require lenders to closely review a borrower’s ability to pay and also eliminate loans that are considered unsafe for consumers, will be in effect January 10, 2014. The Ability to Repay rule requires lenders to evaluate borrowers’ financial fitness to repay a loan, based on their income or assets; employment; the monthly payment on the desired mortgage; monthly payments on other debts; payments on other mortgage-related costs, such as home and mortgage insurance and property taxes; any commitments for child support or alimony; credit history; and what remains after debts are paid. In most cases, the borrower’s total monthly debt payments can’t exceed 43 percent of their monthly gross income. In addition, the Qualified Mortgage rule defines a category of loans that are safest (most affordable) for consumers. “If you are a borrower getting a qualified mortgage, your loan cannot contain certain features that often have harmed consumers in the past, such as excess points and fees,” the CFPB advised. This also means there will be no more interest-only mortgages and no negative-amortization mortgages. The new rules apply to Fannie Mae and Freddie Mac loans.

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Ability-to-Repay and Qualified Mortgage Rule

SMALL ENTITY COMPLINACE GUIDE

http://files.consumerfinance.gov/f/201308_cfpb_atr-qm-implementation-guide_final.pdf

Posted in:General
Posted by Dana Bain on November 6th, 2013 2:08 PM

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