There are new rules which affect financial institutions involved in the mortgage business in the United States. Lenders have to be able to verify the individuals they loan money to can repay their home mortgages. This is pursuant to the new rules designed by the Consumer Financial Protection Bureau under the Dodd- Frank Law that regulates Wall Street.
New Consumer Protection Laws
Under the new consumer protection laws, banks have to take into consideration a variety of factors when making mortgage loans. Included in these factors are the income of the borrower, the financial health of the borrower, the borrower’s credit history, and his or her other debts. The purpose of the reform law is to prevent the meltdown in the home mortgage industry that took place between 2000 and 2009 which caused millions of Americans to have their homes sold in foreclosure sales. The new statutes seek to prevent lenders from engaging in loaning funds for home mortgages to individuals who simply cannot afford to pay back the loans.
Other Aspects of The New Consumer Protection Laws
The law deals with a homeowner’s ability to pay their mortgage has created a lot of concern for financial institutions. Mortgage lenders are concerned if the homeowners fail to make their mortgage payments and their homes are foreclosed on by banks they will claim in the foreclosure actions the financial institutions had known or should have known that they couldn’t afford to make the mortgage payments under these loans.
New Regulations Affect Low Income Prospective Homeowners
Experts in the mortgage industry are claiming the new regulations will make it very difficult for low income prospective homeowners to qualify for mortgage loans. They claim the new regulations will give the banks less flexibility in working with low income mortgagors. The regulations also regulate mortgage servicing companies.
Elliot S. Schlissel is a foreclosure lawyer representing homeowners facing foreclosure lawsuits throughout the Metropolitan New York area.
