More new rules keep coming in from the Consumer Financial Protection Bureau regarding the general credit and mortgage markets, all with the intention of protecting consumers’ finances now and years down the line.
One of the latest releases from the agency notes it has issued a new rule on appraisals for home loans. Along with several other government agencies, the CFPB’s rule mandates creditors enlist a licensed appraiser to physically inspect properties mortgage borrowers intend to purchase, as well as disclose all details of these appraisals to prospective homeowners free of charge.
Additionally, this amendment to the Truth in Lending Act requires lenders to provide another free appraisal for borrowers if “the seller acquired the property for a lower price during the prior six months and the price difference exceeds certain thresholds.”
Current laws don’t require lenders provide an appraisal for consumers who plan to buy homes. However, this new rule, an official with the CFPB notes, will make homebuying a safer financial move for people all across the nation.
“This rule will guarantee consumers can receive important information on how a lender determines the value of the home,” said Richard Cordray, director of the agency. “Having this information available promptly makes it easier for loan applicants to make informed decisions.”
The rule is expected to go into full effect as of January 2014, and will apply to all first-lien mortgages. Thus, lenders nationwide have a substantial amount of time to learn about the rules to comply with them in a year’s time.
The CFPB also finalized some regulatory measures that were originally brought to the table in August 2012: one dealing with communication between lenders and their clients, and one regarding foreclosure alternatives.
The agency is making it mandatory for lenders to be in constant communication with those who secure loans through them in the future to make that process as transparent as possible. This includes providing borrowers with information pertaining to interest rate adjustments and when borrowers begin to fall behind on payments.
The foreclosure ruling requires lenders to wait until issuing a notice of foreclosure until 120 days after a borrower has failed to make a home loan payment and are working on an alternative to foreclosure, including loan modifications.
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