BERKELEY, Calif. (Jan. 8, 2014) — Housing experts at The Greenlining Institute applaud new mortgage rules that take effect Jan. 10. The Consumer Financial Protection Bureau rules are designed to protect consumers from unfair treatment when they take out a mortgage and will help to prevent the kind of irresponsible lending that led to the mortgage meltdown, which devastated communities across the nation.
“After seeing the most vulnerable communities hit hardest by the foreclosure crisis, these rules can help prevent a repeat of that disaster,” said Greenlining Institute Economic Equity Director Sasha Werblin. “These mortgage safeguards include common-sense standards, such as requiring lenders to make sure a borrower can repay the loan and adding protections for struggling homeowners. The CFPB is also working toward ending abusive practices, like steering customers toward high-cost loans.”
Werblin emphasized that, important as they are, new Qualified Mortgage (QM) standards must not become a barrier that needlessly keeps responsible borrowers from getting a mortgage. “There will inevitably be hard-working, responsible borrowers who don’t quite fit the parameters in these rules,” Werblin said. “There needs to be enough flexibility that lenders can look at borrowers as individuals, and we’re confident this can be done without a return to the wild-west atmosphere of the bubble.”
CFPB Director Richard Cordray has acknowledged this, telling the Mortgage Bankers Association last October that “there are plenty of good loans made every year” that, while non-QM, “nonetheless are based on sound underwriting standards and routinely perform well over time.”
The CFPB has released resources for consumers as part of its campaign to educate the public about the new protections. These include a fact sheet with an overview of the mortgage rules and a summary of the new procedures that will help borrowers access options for avoiding foreclosure. Through its AskCFPB online tool, the Bureau provides plain language answers to consumers’ mortgage-related questions.
These materials will also be available in Spanish, Tagalog, traditional Chinese, Haitian Creole, French, Korean, and Vietnamese.
Consumers who would like to discuss their new protections under these rules can also contact their local housing counselor through the Department of Housing and Urban Development’s online listing, organized by state.