CPFB Rules Working

In remarks made yesterday, the head of the Consumer Finance Protection Bureau (CFPB) noted that most of their new rules governing provision of credit and loans to the general consumer market appear to be working and working very well. While the CFPB is mostly known for its rules trying to help individual borrowers in regards to credit card and similar debt, they also have created rules for the safe and fair granting and administration of mortgages. The two rules most closely related to fair administration of mortgages are the Ability-to-Repay rule (ATR) and the Qualified Mortgage (QM) rule. The former specifically lays out guidelines for lenders to follow when making a loan to insure that the borrower is able to repay the loan. In the recent financial meltdown of the last few years, this was one rule that, due to its non-existence, allowed lenders to make loans and pay little attention to the likely ability of borrowers to ever be able to repay. This situation, of course, allowed many loans to be made that should never have been, with the result that many of them ended up in default and the underlying homes they financed being foreclosed upon. The QM mortgages are administered with new rules banning dual tracking and restricting the speed with which foreclosures may be initiated. Dual tracking, for those of you yet to suffer through it, is the now banned practice that allowed a lender to simultaneously commence foreclosure procedures for a defaulted loan at the same time that the borrower was supposedly being considered for a modification. Usually, the lender's employees working on both procedures for a specific loan never spoke to one another, with the frequent result that a borrower diligently working with his/her lender to gain a loan mod would be foreclosed with little or no warning. If you have any questions about your home mortgage, home credit line or other credit obligations, give a call to the CFPB or go to its web site: www.consumerfinance.gov . Good luck.