Federal Reserve Requesting Public Comment
April 21, 2011
On Tuesday, April 19, the Federal Reserve Board requested public comment on a proposed rule under Regulation Z which implements the Truth in Lending Act (TILA). The proposal would apply to all consumer mortgages (except home equity lines of credit, timeshare plans, reverse mortgages or temporary loans).
As an aside, wouldn't it have been clearer to spell out which loans it would apply to since clearly it does not apply to "all" loans?
Lenders will be required to make sure prospective borrowers were able to repay their mortgages before giving them a loan. The rule would establish minimum underwriting standards such as requiring the lender to verify a borrower's income, the amount of debt they have and whether they have a job. Apparently in the wild boom days of real estate, lenders did not do this sort of qualifying and with the collapse of the real estate market, some borrowers sued lenders on the grounds that the lender did not take the "proper steps" when they approved the mortgage. These new rules would protect the lenders from liability if the "qualified mortgage" does not violate the payment provisions.
If you wish to learn more about the Fed's proposal you can go to
http://www.federalreserve.gov/
The rules also address the refinancing of "non-standard mortgages"
to a more stable "standard mortgage".
The rules will be implemented by the new Consumer Financial Protection Bureau which opens on July 21, 2011.
On Tuesday, April 19, the Federal Reserve Board requested public comment on a proposed rule under Regulation Z which implements the Truth in Lending Act (TILA). The proposal would apply to all consumer mortgages (except home equity lines of credit, timeshare plans, reverse mortgages or temporary loans).
As an aside, wouldn't it have been clearer to spell out which loans it would apply to since clearly it does not apply to "all" loans?
Lenders will be required to make sure prospective borrowers were able to repay their mortgages before giving them a loan. The rule would establish minimum underwriting standards such as requiring the lender to verify a borrower's income, the amount of debt they have and whether they have a job. Apparently in the wild boom days of real estate, lenders did not do this sort of qualifying and with the collapse of the real estate market, some borrowers sued lenders on the grounds that the lender did not take the "proper steps" when they approved the mortgage. These new rules would protect the lenders from liability if the "qualified mortgage" does not violate the payment provisions.
If you wish to learn more about the Fed's proposal you can go to
http://www.federalreserve.gov/
The rules also address the refinancing of "non-standard mortgages"
to a more stable "standard mortgage".
The rules will be implemented by the new Consumer Financial Protection Bureau which opens on July 21, 2011.
posted by shirley harry at 8:52 AM
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