Earlier this month federal industry regulators announced a new development in rules designed to avoid “high-risk no-document home loans” in an effort to protect consumers as well as avoid another collapse within the housing/home loan industry.
The Consumer Financial Protection Bureau (CFPB) and it’s “Ability to Repay” rule in short will certify that “responsible borrowers get responsible loans”, said CFPB Director Richard Cordray.
According to the CFPB website, the new rule includes the following points:
• Financial information has to be supplied and verified
• A borrower has to have sufficient assets or income to pay back the loan
• Teaser rates can no longer mask the true cost of a mortgage
• No excess upfront points and fees
• No toxic loan features
• Cap on how much income can go toward debt
The proposed rule, if approved is expected to be put into effect in January 2014.