There have been far more regulations released for the lending industry in the last few years than ever before, and that trend continued over the last week, with the federal consumer finance watchdog agency releasing three more rule summaries for laws related to the issuing mortgages.
The Consumer Financial Protection Bureau recently gave new guidance for three rules related to the mortgage industry, which are generally designed to add more protections for people who want to obtain home loans, according to a report from HousingWire. The first, related to the Home Ownership and Equity Protection Act, which is supposed to help homeowners who are refinancing or obtaining home equity loans avoid high rates and fees, extends its protections to nearly all loan types, save for those related to reverse mortgages, financing specifically for construction of a home, or loans originated through housing finance agencies, which come with their own protections.
Meanwhile, the Equal Credit Opportunity Act states that lenders cannot discriminate against borrowers on the basis of their race, color, religion, national origin, sex, marital status, or age, the report said. Further, they cannot take into consideration whether all or part of a potential borrower’s income is the result of public assistance, or if they have exercised rights under the Truth in Lending Act. That rule, which was also outlined by the CFPB, was updated to include guidelines that ensure when subprime borrowers are obtaining mortgages, that their homes’ interiors are properly appraised. This means that licensed or certified professionals must physically conduct an inspection of the inside of a home, and write out their appraisal for the lender.
These rules are all slated to go into effect in January of next year, with the HOEPA rule becoming enforceable on January 10, 2014, and the ECOA and TILA regulations coming eight days later, the report said.
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The housing market has been particularly tough for borrowers in the last several years, but problematically, credit conditions remain tight even as they slacken for other types of financing, such as credit cards and auto loans. Many lenders may not want to deal with the potential for increased instances of delinquency and default once again, but others say that they do not want to run afoul of these greater regulations, some of which may overlap and create confusion within the industry.
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