Here is the second part of an update on the Consumer Financial Proetction Bureau as mandated under the Dodd-Frank Act. Earlier, I posted three sections that purtain to the act that may be of interest and here a an additional three. These were compiled for a series of legal articles.
4. Offering alternatives to points and fees:
“If the creditor pays loan originator compensation, the CFPB proposes that the creditor may not impose any discount points or origination points or fees unless the creditor makes available to the consumer a comparable, alternative loan that does not include discount points and origination points or fees to the creditor, broker, or affiliate of either (‘points and fees’), unless the consumer is unlikely to qualify for such a loan.”
5. Requiring additional appraisals for higher-risk loans:
“The new requirements apply to loans for which the APR exceeds the average market rate by 1.5 percent for first-lien loans, 2.5 percent for first-lien jumbo loans, and 3.5 percent for subordinate-lien loans… A creditor would have to obtain a written appraisal from a certified or licensed appraiser that is based on a physical property visit of the interior of the property. At application, the creditor would have to issue a disclosure stating the purpose of the appraisal, that the creditor will provide the applicant a copy of any written appraisal, and that the applicant may choose to have a separate appraisal conducted at his or her own expense.”
6. Giving borrowers advance warning of interest rate adjustments:
“Servicers would have to provide earlier disclosures before the interest rate adjusts for most adjustable-rate mortgages. This disclosure would include information about alternatives and counseling resources if the new payment is unaffordable. Existing disclosures for interest rate adjustments that cause a change in mortgage payments would be amended to include improved information and arrive earlier so that borrowers can anticipate consequences of payment changes.”
7. Prohibiting mandatory arbitration requirements in credit agreements:
“The CFPB proposes to implement the Dodd-Frank prohibition on the inclusion of a mandatory arbitration requirement in any contract or other agreement for a consumer credit transaction secured by a dwelling.”
Clearly, these changes should help homeowners but it is equally clear that these mandates are being largely ignored by lenders and servicers.
Paddy Deighan J.D. Ph.d
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